[Senate Hearing 113-65]
[From the U.S. Government Publishing Office]
S. Hrg. 113-65
SECURE RURAL SCHOOLS AND PAYMENT IN LIEU OF TAXES
=======================================================================
HEARING
before the
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
TO
EXAMINE THE OPTIONS AND CHALLENGES RELATED TO POSSIBLE REAUTHORIZATION
AND REFORM OF TWO PAYMENT PROGRAMS FOR LOCAL GOVERNMENTS-THE RECENTLY
EXPIRED SECURE RURAL SCHOOLS AND COMMUNITY SELF-DETERMINATION ACT AND
THE PAYMENT IN LIEU OF TAXES
__________
MARCH 19, 2013
Printed for the use of the
Committee on Energy and Natural Resources
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82-563 WASHINGTON : 2013
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
RON WYDEN, Oregon, Chairman
TIM JOHNSON, South Dakota LISA MURKOWSKI, Alaska
MARY L. LANDRIEU, Louisiana JOHN BARRASSO, Wyoming
MARIA CANTWELL, Washington JAMES E. RISCH, Idaho
BERNARD SANDERS, Vermont MIKE LEE, Utah
DEBBIE STABENOW, Michigan DEAN HELLER, Nevada
MARK UDALL, Colorado JEFF FLAKE, Arizona
AL FRANKEN, Minnesota TIM SCOTT, South Carolina
JOE MANCHIN, III, West Virginia LAMAR ALEXANDER, Tennessee
CHRISTOPHER A. COONS, Delaware ROB PORTMAN, Ohio
BRIAN SCHATZ, Hawaii JOHN HOEVEN, North Dakota
MARTIN HEINRICH, New Mexico
Joshua Sheinkman, Staff Director
Sam E. Fowler, Chief Counsel
Karen K. Billups, Republican Staff Director
Patrick J. McCormick III, Republican Chief Counsel
C O N T E N T S
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STATEMENTS
Page
Baucus, Hon. Max, U.S. Senator From Montana...................... 6
Bennet, Hon. Michael F., U.S. Senator From Colorado.............. 3
Fennell, Anne-Marie, Director, Natural Resources and Environment
Team, Government Accountability Office......................... 18
Haggerty, Mark, Policy Analyst, Headwaters Economics, Bozeman, MT 58
Haze, Pamela K., Deputy Assistant Secretary for Budget, Finance,
Performance and Acquisition, Department of the Interior........ 14
Heller, Hon. Dean, U.S. Senator From Nevada...................... 3
Landrieu, Hon. Mary, U.S. Senator From Louisiana................. 6
Manuel, Athan, Director, Lands Protection Program, Sierra Club... 80
Murkowski, Hon. Lisa, U.S. Senator From Alaska................... 4
O'Laughlin, Jay, Professor of Forestry & Policy Sciences, and
Director, Policy Analysis Group, College of Naturan Resources,
University of Idaho, Moscow, ID................................ 67
Pearce, Paul J., President, National Forest Counties and Schools
Coalition, Stevenson, WA....................................... 44
Tidwell, Thomas, Chief, Forest Service, Department of Agriculture 9
Wyden, Hon. Ron, U.S. Senator From Oregon........................ 1
Yates, Ryan R., Associate Legislative Director, Legislative
Affairs Department, National Association of Counties........... 50
APPENDIX
Responses to additional questions................................ 83
SECURE RURAL SCHOOLS AND PAYMENT IN LIEU OF TAXES
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TUESDAY, MARCH 19, 2013,
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The committee met, pursuant to notice, at 10:02 a.m. in
room SD-366, Dirksen Senate Office Building, Hon. Ron Wyden,
chairman, presiding.
OPENING STATEMENT OF HON. RON WYDEN, U.S. SENATOR
FROM OREGON
The Chairman. Committee will come to order. Senator
Murkowski is on her way. We have gotten permission to begin.
I'm very pleased that the distinguished Chairman of the
Finance Committee, Senator Baucus, is here.
Let me just make a brief opening statement.
Today the committee is going to look at options for
reauthorizing and reforming the Secure Rural Schools and
Community Self-Determination Act and the Payment in Lieu of
Taxes program. Both of these programs are absolutely critical
to rural America. Today we will have a number of knowledgeable
witnesses who will talk about the funding for these programs as
well as possible reforms that could be considered in extending
and updating them.
In the 1980s years of unsustainable timber harvests
collided with renewed public concern over clean air and water
and endangered species. This collision left our country with a
broken forestry system and produced the worst of 2 worlds, an
inadequate timber harvest and inadequate protection for our
public lands. Our timber communities lost jobs while
conservation was more often handled by lawyers and judges
rather than foresters and biologists.
That's why in 2000 along with our former colleague, Larry
Craig, I authored the Secure Rural Schools and Community Self-
Determination Act to provide a lifeline for timber dependent
communities across the Nation.
PILT, Payment in Lieu of Taxes, has also existed to help
provide more stable funding to counties containing Federal
land, but it has suffered a number of funding shortages over
the years.
Now the funding for Secure Rural Schools expired last year
and full funding for the PILT program ends this year. So we now
have across the country cash-strapped, rural communities facing
deadlines this spring to decide about retaining teachers,
whether or not to close schools, what to do about law
enforcement and roads and other basic services. So it is
especially important that Congress act quickly.
I'm especially pleased that our colleague, Chairman Max
Baucus, who chairs the Finance Committee, on which I'm honored
to serve, is here this morning. Chairman Baucu, colleagues, has
been there again and again and again for the Secure Rural
Schools program. I just want people to know as we begin this
debate that looking back on the odyssey of the Secure Rural
Schools program, it would have been hard to keep this program
afloat without the good work Chairman Baucus has been doing.
So Chairman Baucus, thank you very much for all the past
help and the assistance that you have pledged going forward.
I also want to make clear at this time that a short term
extension of the Secure Rural Schools program is not a long-
term solution for our hard-hit, resource-dependent communities.
So our job now is to look for a long-term solution as well.
That means focusing in 2 areas.
First, it's way past time to get our people back to work in
the woods and increase the timber harvest off Federal lands.
More good-paying, private sector jobs are needed in resource-
dependent communities with Federal land and Federal waters.
This is something I believe can be done consistent with our
environmental laws.
That's why I'm working with Senator Murkowski, Senator
Landrieu, and others on a more comprehensive approach to share
revenue from Federal land and waters with resource dependent
communities. In effect what we are talking about is pursuing
this on a dual track. Boosting timber cuts and providing a
safety net that provides for schools, roads, and police in
resource-dependent communities and then our bipartisan
coalition will also support reauthorizing the Secure Rural
Schools payment program while looking for a long-term solution
that understands that we have to increase our timber harvests,
look to jobs in communities that abut Federal land and Federal
water and protect our environmental heritage. With respect to
Federal Forests, that means in some areas we would increase the
harvest and in some areas we would conserve our special
treasures.
The members of this committee have, over the last 15 years,
made it a priority to build bipartisan coalitions to break the
bureaucratic log jams on public lands management.
That's what happened with Secure Rural Schools.
That's what happened with the Healthy Forest Restoration
Act.
That's what we've seen in Eastern Oregon where the
environmentalists and timber industry came together.
I do want to state that while we are going to look at
further hearings to focus on forest management, we understand
that experts are telling us that it is not possible to cut
enough trees to produce historic levels of funding in rural
communities and comply with the multiple uses of our Federal
Forests that our communities want and meet our bedrock
environmental laws. So the challenge is to find a way to pursue
on this dual track a short-term and a long-term solution while
looking at some fresh approaches and rejecting those approaches
that have not worked in the past.
Short cuts like selling off Federal lands or ignoring
environmental laws cannot be expected to pass the Senate or be
signed by the President. These ideas have failed for more than
20 years. To create a realistic solution for increased forest
management, any solution is going to require a broad coalition
with buy-in from all sides that has been shown to work in the
past.
I believe that as we look to cut more timber on Federal
forest lands, we can do it in a way that creates jobs, saves
mills, and makes our forests healthier and more resistant to
wildfire, insects, and disease. The committee is going to work
in a bipartisan way to achieve this goal of upping the timber
harvest while protecting old growth stands, clean water, and
essential habitats. We believe we can do it in a bipartisan way
by streamlining the bureaucracy around forest management,
promoting tourism and recreation, and increasing biomass energy
development.
Rural counties with Federal lands and waters deserve to be
able to staff their schools, fund law enforcement, and maintain
the roads required by the use or preservation of these lands.
My policy to end the perpetual roller coaster from revenue
sharing includes new initiatives to create private sector jobs,
protect the environment and most of all, make sure that rural
America does not become a ghost town. It's time for a broader
revenue sharing effort that can provide affected States and
communities with a share of the money generated from resource
extraction from nearby Federal lands and Federal waters.
Senator Murkowski, our ranking member, has a great interest
in this issue as does Senator Landrieu. Let me recognize you
now for your opening statement, Senator Murkowski.
[The prepared statements of Senator Heller and Senator
Bennet follows:]
Prepared Statement of Hon. Dean Heller, U.S. Senator From Nevada
Over 90 percent of all federally-owned land is located in western
states. For westerners, the federal government's ownership of vast
quantities of land not only limits the self-determination and economic
development, it also robs local communities of property tax revenues
and the taxes associated with private business development. As a
result, federal land ownership forces westerners to pay higher property
taxes to pay for essential services such as law enforcement, health
care, and education.
Nowhere is this more on display than in Nevada, where 87 percent of
our land is controlled by the federal government. In Nye County, only
250,000 acres of the 11,640,196 acres are private lands. In Lincoln
County, only 142,952 of 6,804,733 acres are private lands. And the list
goes on.
The PILT program is necessary to help maintain and improve the
health and vitality of our public lands communities, as well as to help
local communities to meet obligations and expectations of visitors to
federal lands.
While I am deeply aware of the limitations presented by our current
fiscal situation, I remain firm in my belief that the federal
government has a responsibility to fulfill its obligations to the
counties which it denies a local tax base.
______
Prepared Statement of Hon. Michael F. Bennet, U.S. Senator
From Colorado
I write to applaud the Senate Energy and Natural Resources
Committee for scheduling tomorrow's hearing entitled, ``Keeping the
Commitment to Rural Communities.'' As you know, the Secure Rural
Schools (SRS) and Payments in Lieu of Taxes (PILT) programs are
lifelines for rural counties across the West.
PILT, in particular, is vitally important to my home state of
Colorado. Dozens of Colorado counties contain high percentages of
federal public land--land on which they are unable to collect property
tax revenue. PILT serves to compensate partially for this foregone
revenue, and the program's resources are employed to provide essential
community services like road maintenance and emergency responders.
Failure to renew PILT will lead to job losses in Colorado and even
potential insolvency for some of our communities. I appreciate the
Committee's attention to this important matter and stand ready to help
as you seek a long-term solution to this persistent problem.
STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR
FROM ALASKA
Senator Murkowski. Thank you, Mr. Chairman. I appreciate
that you have scheduled this hearing as early into this
particular Congress as you have. As you know it's an
exceptionally important issue for many of our States and truly
a priority here.
The Federal compensation programs that we're talking about
today, whether Secure Rural Schools or Payment in Lieu of
Taxes, have been extraordinarily valuable in our rural
communities, certainly in my State of Alaska. I know that these
programs are important to you, certainly to you, Senator
Baucus, and I also appreciate your leadership and your efforts
as we have tried to find the dollars necessary to continue the
very important funding. We're going to have to count on you
once again to help us out with that.
But we recognize the challenges. I would certainly concur
with the chairman here, that we need to find longer term
solutions so that we don't go from year to year. The anxiety,
the stress, that I hear from my communities.
The community of Wrangell, where I went to elementary
school, is a community where 64 percent of their budget for the
school comes from Secure Rural Schools funding. When they don't
know where 64 percent of their budget is going to be coming
from on a year to year basis, it causes a great deal of stress.
I want to mention first Payment in Lieu of Taxes program.
The PILT program, of course, is permanent. So we're not
concerned about the program expiring. But what we are concerned
about is the level at which the program is funded.
Over the last several years when we reauthorized and
extended Secure Rural Schools we also turned PILT into a
mandatory funded program. I think this was primarily done to
build the political support to reauthorize and extend Secure
Rural Schools. PILT was created in 1976 by Congress because we
changed our Federal land policy from one that was focused on
disposal to one that was focused on retention. These payments
are literally payments in lieu of taxes to compensate our local
governments for the loss in tax revenue caused by this change
in policy and how PILT is funded in the future whether
programmatic changes are needed and its relationship to Secure
Rural Schools are certainly something that we need to explore.
Secure Rural Schools, unlike PILT, was largely a
replacement program for the receipt sharing programs whether
it's the Forest Service payments to States and the Bureau of
Management that Oregon and California have for their payments.
These payments made under these programs were historically from
receipts generated by timber sales for roads and school
purposes. But I think we recognize that they were never
intended to be a permanent entitlement program, but more
specifically a temporary, short term bridge to allow the
communities to transition to the new economic reality that was
forced upon them by environmental policies that were designed
to halt timber harvesting.
But if you are a community, like Ketchikan, where I was
born down in Southeast Alaska, Ketchikan, their private taxable
lands within the Ketchikan gateway borough are 0.3 percent, 0.3
percent. So if you have no other place to go.
If 96.5 of the percent of the land in your borough is held
by the Federal Government.
The State has 1.3 percent.
The local government has 0.3 percent.
There is 0.3 percent that is taxable land. So when you say
you've got this Federal policy that says you can't harvest
within the Tongass because we're just saying you can't harvest
in the Tongass. You have no place to go for your tax base. We
say, well this is just going to be a temporary program for you
until you can transition.
The question is what do you transition to?
Where do you go?
Of course, Chief Tidwell and I have had many, many
conversations about where we go from there.
But our counties, our boroughs, our other communities, have
received payments for more than a decade now. For some of your
counties in Oregon and Washington, Northwest California, who
receive the Spotted Owl payments, they've been seeing these
Secure Rural Schools payments for more than 2 decades. Now
again, we're talking about the need for another short term
extension, but I think we all know, I mean we're having budget
conversations this week. It's on everybody's mind.
The Federal Government, the Federal Government is broke
here. We can't continue to pay counties to not utilize the
lands within their boundaries. Mr. Chairman, you have
appropriately suggested where we need to go with this.
You need to be able to access the resources that are on
your lands. We either need to utilize our Federal lands to
generate the revenue and the jobs for our rural communities or
we should divest the Federal Government of those lands and let
the States or the counties, the boroughs, manage them.
Mr. Chairman, you've suggested that that probably isn't
going to enjoy support within the Congress. Maybe that's true.
But boy, oh boy, we've got to have something here. You've got
to have some way for these communities to survive otherwise, I
think, they do go the way that you have suggested that they
might, which is to turn into ghost towns. That's not a solution
that I think is one that we would support.
We do need to address, head on, the fact that federally
owned land has a profound impact on the fiscal and economic
base of a community as well as the social fabric. So we've got
a good panel here this morning. I appreciate that we're led off
by Senator Baucus on this issue.
But Mr. Chairman, I look forward to working with you, with
Senator Landrieu and so many others as we try to find a longer
term solution for these communities in these rural areas that
are impacted so profoundly.
Thank you, Mr. Chairman.
Senator Landrieu. Can I just----
The Chairman. Yes, of course, Senator. If--I know Chairman
Baucus has his hearing. I know Senator Landrieu would like to
make a comment or 2.
STATEMENT OF HON. MARY LANDRIEU, U.S. SENATOR
FROM LOUISIANA
Senator Landrieu. I'd just like to make 30 seconds while
Senator Baucus is here. Then I'll submit the rest of my
statement for the record.
But I want to thank you, Mr. Chairman and the ranking
member for hosting a series of hearings that might find a
really, a long term solution for the problems that both
interior States, western States and coastal States are
experiencing which is the very disjointed and hard to
understand sharing or not sharing of these revenues with the
communities that actually are hosting and needing the support
from the production of these revenues.
So I'll look forward to working with Senator Baucus and
both of you on finding a way forward. Because I think both of
you expressed the real need of communities where Federal
policies have severely impacted their abilities to produce
their own revenues and the need for some sort of partnership
and sharing to produce the natural resources in a wise way,
respecting the environment, but also respecting the needs of
Americans to work and to remain competitive in this world. I
think we can find the way forward.
So thank you very much.
The Chairman. Thank you, Senator Landrieu.
I think the point of finding the way forward, having been
to both of your communities in the last few months, I'm just
struck at how there's this common thread wherever there's
Federal land and Federal water. People are looking to find ways
to create private sector jobs, protect their treasures, and
come together. At one point I was struck in your State, Senator
Landrieu, listening to people around the table the main
difference between the folks around the table in Louisiana and
the folks sitting around the table in Southern Oregon is your
constituents had different accents than mine. But other than
that they were looking for the same kind of hope, jobs,
environment and coming together.
With that, Chairman Baucus, I know you've got a hearing. We
are so appreciative of the fact that you have been so committed
to our rural communities. We would not have made it through
those--that odyssey of authorizations over the years without
your being in our corner.
So please proceed. Thank you again for your help.
STATEMENT OF HON. MAX BAUCUS, U.S. SENATOR
FROM MONTANA
Senator Baucus. Thank you very much, Mr. Chairman. I
appreciate that.
Senator Murkowski, Senator Landrieu, thank you all 3 and
all the other members of the committee.
I'd also like to welcome Thomas Tidwell. I'm very happy
he'll be testifying later this morning.
Even more importantly we have a fellow Montanan here, Mark
Haggerty. He is an expert on policies affecting public land
use. He's sitting just a couple rows behind me. You'll hear
from him a little bit later. Mark is from Bozeman, Montana, one
of the most beautiful spots, I think, in the whole world.
We're here today to discuss 2 programs that support jobs,
Montana jobs and other jobs in counties where there's a lot of
Federal land, Secure Rural Schools and Payment in Lieu of
Taxes. These obviously are counties that contain a lot of
Federal land. With a lot of Federal land they face a much lower
tax base and also less natural resource revenue.
I remind everyone that this is America's lands. All
Americans own Federal land. Americans use National Forest
System land, BLM land, other Federal land. Not only the people
in the communities use those lands but other Americans all
across the country, especially when they're taking their family
on vacation, use not only those lands, but adjacent areas, the
roads in those counties that the county commissioners are
trying desperately to finance.
If they don't have the tax base, it's pretty hard for them
to finance those roads and other amenities that the local folks
use, but also people from around the country use. That's all
the more reason why this is really--there's a need for a
Federal solution to this. We all know what it's been.
Last year Congress overwhelmingly passed both Payment in
Lieu of Taxes as well as Secure Rural Schools because it is
needed nationwide. More needed probably in those counties that
have a lot of Federal land included in the tax base. But it's
also needed nationwide because this is a really, in a real
sense of the term, America's program.
When I talk to county commissioners, you know, they all
want to do the right thing. They run for office just like we.
In many respects they've got a tougher job than we. They're so
close to the people.
They talk to me. Max, we just need a bill to get some
revenue. So we can maintain roads, etcetera.
In one county, for example, a bit of it is--74 percent
Federal. Just imagine you've got--when 74 percent of your
county at one, is pretty populous, a county that has a lot of
people in it. Seventy-four percent of your county is Federal
land. It's hard to raise the property tax rate revenue to
support the services there.
People like Todd Devlin. Todd Devlin is a county
commissioner from Prairie County. Todd makes the same point to
me. I note these points are points that you've all heard when
you talk to your people in your home States as well.
Senator Murkowski, up clear in Alaska, I can't think of a
State that's got more Federal land than yours. So, obviously
it's--what's something you hear about constantly.
The question is how do we pay for this?
Last year we were able to cobble together a few provisions
to help pay for it. It was about $676 million price tag, Secure
Rural Schools plus PILT. We're up to the challenge. We'll find
other ways to make sure we can finance it another way.
Why is that important?
Because this stuff is at neutral. That means there's not
one thin dime owed to the Federal taxpayers by providing for
Secure Rural Schools and PILT payments.
I might remind all of our--everybody listening too that
this is non-partisan. While we have fiscal deadlocks around
here, we stand to get a bit partisan. This is not one of those.
This is one where Members of Congress, both sides of the
aisle, work together. It's not a partisan issue whatsoever. I
think that's the reason last year it got a strong vote. This
year I know it will also get another strong vote.
Clearly we have to find the revenue. We'll work hard to try
to find a revenue in the least oppressive way. I'm not sure
what that is, but the tax code is pretty big with lots of
different futures to it. In fact it's so big that lots of folks
want to, so called, broad the base and get rid of some of those
tax expenditures.
Be that as it may, I pledge that I'll work very closely
with you. This is so important to my State. It's so important,
I know, to your States and many other States. Working together,
it's all teamwork. We'll find a way to finance this so we can
get it done.
You made a very good point, Mr. Chairman, about a longer
term solution. There are way too many short term solutions here
in the Congress. It's just--the years that I've been here it's
just programs that get compressed and compressed and compressed
in shorter periods of time.
There were over 120, about 100 provisions in the code, tax
code, we call extenders. They last about a year, 18 months. It
just turned out that way.
On a highway bill authorization is just, as well know, are
very short term now. They used to be 5, 6 years. The farm bill
used to be 5 years. It's now, you know, about a year. We've got
extensions. Everything is extended.
I did not come here to be an extender Senator. I'm sure you
did not come here to be extender Senators. I didn't come here
to be a maintenance Senator, neither did you, I'm sure. You
came here to do stuff. Not be just spend all our time waiting
behind the wheel, you know, wrapped around the axle as we try
to just extend things.
It takes a lot of time, a lot of time, simply, to extend
something for a year, a lot of time. The reason it takes so
much time is because usually it requires revenue. You've got to
find revenue someplace to pay for an extender, to pay for
something, to pay for SRS, to pay for PILT. It's not easy to
find new revenue to do this.
I have some ideas how to make this longer term. I urge that
we work together to try to compare notes to try to find ways to
accomplish that objective. But I strongly, strongly urge you as
you work into reauthorize these 2 programs to also pay ordinate
attention and just thinking out of the box, creatively, figure
out a way to make this dog gone thing longer term so there's
more certainty predictability for county commissioners, for
folks at home, for the Forest Service, other Federal agencies,
so they don't have to keep going back every year, every year
voting it out, voting it out.
Also it means we can devote a lot of our time doing some
other things, knowing that we've taken care of SRS, taken care
of PILT for a while, not permanently, clearly, but at least
indefinitely so we can, again, move onto something that's else
in addition to making sure our people are taken care of with
these 2 programs.
Thank you, Mr. Chairman.
The Chairman. Mr. Chairman, thank you very much. I'm struck
with your point about the teamwork issue. Of course everybody
came in to work today. They filled out their brackets for March
Madness. Of course they had the Oregon Ducks in the Final 4.
[Laughter.]
The Chairman. We were happy about that.
Your point about teamwork is absolutely right. But if you
talk about teamwork over these last 14 years, there's somebody
we had to give the ball to when the game was on the line. That
was you. I mean, you stepped up for this program again and
again and again. You gave a lot of hope to rural communities a
few weeks ago when you announced that you'd help us get that
short-term program.
So teamwork, as you said, is what it's about. But we're
very glad that you've been willing to take the ball when----
Senator Baucus. Thank you, Chairman. I neglected to give
you sufficient praise. You are working very, very hard on this.
Whenever I think of Secure Rural Schools and PILT, I also
think of you.
The Chairman. We're going to stay on in your point about
trying some fresh approaches. That's what my colleagues have
been doing.
I know Chairman Baucus? time is tight. Do either of you
have anything you'd like to ask?
Senator Murkowski. Just thank you.
Senator Baucus. Thanks for all you're doing. Appreciate it.
The Chairman. Chairman, thank you.
Alright our next panel will be the Honorable Thomas
Tidwell, Chief of the Forest Service.
Pamela K. Haze of the Department of Interior, Deputy
Assistant Secretary for the Budget.
Anne-Marie Fennell, with the Government Accountability
Office.
We thank all of you. Chief, let me have you begin to be
followed by Ms. Haze and Ms. Fennell.
Chief, I just want to say as we start your presentation how
much we've appreciated your professionalism and assistance for
this committee. Again and again, you've helped us try to come
up with creative approaches. As you know, these issues are not
for the faint-hearted.
I mean in rural communities, particularly when I think
about places in Coos County and rural Lane County, you know,
all over are Curry County, Josephine County, all over our
State. You just walk an economic tightrope trying to survive.
So these are not abstract issues.
You've helped us come up with approaches to, at least, give
us an opportunity to get both the short and long-term
solutions. So we welcome your presentation. We'll make your
prepared remarks a part of the hearing record in their
entirety.
Why don't you start, Chief. We'll just proceed with our
witnesses.
STATEMENT OF THOMAS TIDWELL, CHIEF, FOREST SERVICE, DEPARTMENT
OF AGRICULTURE
Mr. Tidwell. Mr. Chairman, thank you.
Ranking Member Murkowski, it's great to see you again.
Members of the committee, thank you for the opportunity to
be here to present the views of the U.S. Department of
Agriculture on Secure Rural Schools and the Community Self-
Determination Act.
The Administration strongly supports ways that the Federal
Government can support economic activity in rural America and
fulfill its obligation to share receipts from these public
lands whether it's from the PILT payments, sharing with States
the mineral revenues from public lands, to the land use fees,
the timber receipts, the grazing receipts that contribute to
Secure Rural School payments.
Secure Rural Schools has been a key program for 729
countries, boroughs and townships. Mr. Chairman and members of
the committee, I just want to personally thank you for your
leadership around this issue for the last few years. It has
made a significant difference in these local economies.
The Administration supports reauthorization of Secure Rural
Schools with mandatory funding. Secure Rural Schools fulfills
the Federal Government's obligation to compensate local
governments for the tax exempt status of national forests to
help fund public schools and county roads through stable,
dependable payments that the counties and boroughs can rely on.
Also this has really helped to sustain and diversify local
economies.
But it's much more than that. Title II and Title III allow
counties to dedicate up to 15 to 20 percent of their payments
for a variety of projects.
Title II provides funding for projects like thinning on
national forests to reduce the threat of wildfire to things
like integrated weed control that benefits all lands.
Title III helps counties fund search and rescue and
provides funding for county planning to reduce wildfire threat
to communities.
Although recreation is now the largest economic activity on
the national forests and it contributes over 200,000 jobs and
$13.5 billion to the GDP. The number of visitors that recreate
on the national forests definitely increases the county's cost
for search and rescue programs. With the record fire seasons,
that I believe will continue, county investments into community
wildfire protection plans to reduce the threat of wildfire,
it's essential.
So all of the Secure Rural School programs from the
payments for roads and schools to the projects on the national
forest to the assistance provided to counties for wildfire
protection, all of these programs have been invaluable to the
economic sustainability of our rural communities. But an
additional benefit has come from the Resource Advisory
Committees, the RACs, that are required by Secure Rural
Schools. These are the RACs that make recommendations for the
projects on national forest lands. Because of the requirement
that these RACs have a diverse representation, their project
recommendations have been implemented with very few appeals
over the last 12 years.
I'm not sure you realize what you started with Secure Rural
Schools. But in my view it was the start of the collaborative
processes that we benefit from today all across the country
where diverse interests are working together to support active
management of our national forests. It is through these
collaborative processes that we are able to continue to
accelerate the restoration on our national forests to improve
the fisheries, maintain trails, reduce soil erosion, improve
wildlife habitat and increase the biomass, the saw timber
harvested from the national forests.
With 65 to 83 million acres of our national forests that
are in need of some form of restoration, we recognize the need
to increase the pace of restoration to ensure that our forests
are more resilient to disturbance events like floods, wind
storms, drought, insect and disease outbreaks and wildfire.
Stable, guaranteed payments that counties can depend on, it's
essential. But I can tell you in the long run these RACs have
provided a key benefit and are why today we are able to
accelerate the restoration on our national forests. To restore
these watersheds that continue to provide clean water for 20
percent of this Nation, to maintain the recreational settings
that all support the economic activity and increase jobs in
rural America.
We want to work with the committee to reauthorize the
Secure Rural Schools program, a program that has successfully
strengthened our rural economics, and developed important
collaborative working relationships with diverse interests that
care about how their forests are managed.
I want to thank you again for the opportunity to discuss
the Secure Rural Schools program. I look forward to your
questions.
[The prepared statement of Mr. Tidwell follows:]
Prepared Statement of Thomas Tidwell, Chief, Forest Service, Department
Of Agriculture
CONCERNING
Mr. Chairman and Members of the Committee, thank you for the
opportunity to present the views of the U.S. Department of Agriculture
regarding the Secure Rural Schools and Community Self-Determination Act
of 2000 (the ``Secure Rural Schools Act''), as amended and reauthorized
in 2008 (P.L. 110-343) and again for fiscal year 2012 (P.L. 112-141).
The administration supports reauthorization of the Secure Rural Schools
Act with mandatory funding. Although some receipts for Payment In Lieu
of Taxes (PILT) payments are generated on National Forest System (NFS)
lands, management of the program is the responsibility of the
Department of the Interior (DOI). We defer testimony on this program to
DOI.
Overview
Since 1908, when Congress enacted what is commonly known as the
Twenty Five Percent Fund Act (16 U.S.C. 500) to compensate local
governments for the tax-exempt status of the national forests, the
Forest Service has shared 25 percent of gross receipts from national
forests with states. The so-called ``25 percent payments'' were made to
the states for the benefit of public schools and public roads in the
counties in which national forests are located. The allocation of the
funds between schools and roads varies according to state laws. The
receipts, on which the 25 percent payments are based, are derived from
timber sales, grazing, minerals, recreation and other land use fees.
In the late 1980s, 25 percent payments began to decline
significantly and fluctuate widely. This was largely due, especially in
western states, to a significant decline in timber sales. The declines
and fluctuations created hardships for local officials charged with
providing services to communities in and near the national forests.
The decline in timber sales, and corresponding reduction in the 25
percent payments, was particularly acute in northern California,
Oregon, and Washington. To address this concern, Congress provided
``safety net payments'' to counties in California, Oregon, and
Washington for fiscal years 1994 to 2003. The safety net payments were
enhanced payments structured to decline annually and intended to help
the counties transition to the reduced amount of the 25 percent
payments.
Before the safety net payments expired, Congress enacted the Secure
Rural Schools Act (P.L. 106-393), which provided the option of
decoupling the payments from receipts, by authorizing enhanced,
stabilized payments to states for fiscal years 2000 through 2006. The
Secure Rural Schools Act provided eligible counties with two options. A
county could elect to continue to receive its share of the State's 25
percent payment, which fluctuated based on receipts, or the county
could elect to receive a share of the State's ``full payment amount'',
which was a stabilized amount. A county that elected to receive a share
of the State's full payment amount was required to allocate 15 to 20
percent of its share of the payment to Title II (special projects on
federal lands) or to Title III (county projects), or to return that
amount to the Treasury. Title II funds could only be spent on projects
benefitting the national forests that were recommended by resource
advisory committees (RACs). As part of the initial implementation of
the Act, the Forest Service established 55 RACs; by 2012 there were 118
RACs across the country. The remainder of the county's share of the
payment (80 to 85 percent) was required to be spent for Title I
purposes (for public schools and roads.)
Congress appropriated funds for payments to states for fiscal year
2007, and in October 2008, amended and reauthorized the Secure Rural
Schools Act for fiscal years 2008 through 2011 and again in 2012. With
a few notable exceptions, the Secure Rural Schools Act reauthorizations
mirrored the 2000 Act. The primary change in 2008 was a new formula for
the stabilized State payment, which includes a ramp-down of funding
each year. In addition, the 2008 reauthorization amended the Twenty-
Five Percent Fund Act to reduce the fluctuations in the 25 percent
payments. The 25 percent payments are now calculated as the rolling
average of the most recent seven fiscal years' 25 percent payments.
The last Title I and Title III payments under the Secure Rural
Schools Act for fiscal year 2012 have been made. In 2012, approximately
74 counties elected to receive a share of the State's 25 percent
payment (based on receipts), and approximately 655 counties opted to
receive a share of the State Payment (enhanced, stabilized). Payments
to States for the Forest Service under the Secure Rural Schools Act for
fiscal year 2012 total $305,939,381.
All together, the Forest Service has made payments to 41 States and
Puerto Rico to benefit more than 729 counties, boroughs, townships and
municipalities. Unless the Secure Rural Schools Act is reauthorized,
beginning with the payment for fiscal year 2013, States will receive
the 25 percent payment calculated using the new formula based on a
seven-year rolling average of 25 percent payments. The total of 25
percent payments for allStates is projected to be approximately $58
million for fiscal year 2013.
The Secure Rural Schools Act has 3 principal titles. The U.S.
Forest Service defers to the Department of the Interior for Secure
Rural Schools' activities undertaken by that agency on the Oregon and
California Railroad Grant Lands (O&C Lands).
Title I-Secure Payments for States and Counties Containing
Federal Land
Title I of the Secure Rural Schools Act, as reauthorized, provided
the formula for the State Payment for fiscal years 2008 through 2011
with a one year reauthorization for fiscal year 2012. An eligible
county's adjusted share of the State Payment was determined by a
complex calculation involving multiple factors including acres of
national forest, the average of three highest 25 percent payments from
1986 through 1999, and the county's annual per capita personal income.
The formula reduces the total payments to all States by approximately
10 percent of the preceding year for 2008 to 2011 and by 5 percent of
the preceding year for 2012. Eight States (California, Louisiana,
Oregon, Pennsylvania, South Carolina, South Dakota, Texas, and
Washington) received a transition payment in lieu of the State Payment
for fiscal years 2008 through 2010. The transition payment was based on
the fiscal year 2006 payment and declined by about 10 percent per year.
The Secure Rural Schools Act directs that the majority of the State
Payment be used to help fund county schools and roads. This portion of
the payment is commonly referred to as the Title I payment and has
averaged about 85 percent of the total State Payments to date. For
fiscal years 2008 through 2012, Title I funds provided to States
totaled nearly $1.7 billion.
Title II-Special Projects on Federal Land
An eligible county has the option to allocate part of its share of
the State Payment under Title II for projects that maintain existing
infrastructure or enhance the health of ecosystems on national forests
and support local economies. Title II provides for the establishment of
RACs to review and recommend projects. The Secure Rural Schools Act as
reauthorized added to the duties of the committees and expanded the
interests represented by members.
Title II projects enhance forest ecosystems; restore and improve
the health of the land and water quality; and protect, restore and
enhance fish and wildlife habitat. Examples are maintenance or
obliteration of roads, trails, and infrastructure; improvement of soil
productivity; stream and watershed restoration; control of noxious and
exotic weeds; and re-establishment of native species. These projects
provide employment in rural communities and an opportunity for local
citizens to advise the Forest Service on projects of mutual interest
that benefit the environment and the economy. For fiscal years 2008
through 2012, Title II funds totaled $204 million for projects
recommended in more than 300 counties.
Title III-County Funds
Funds allocated by a county under Title III may be used on county
projects. Title III initially had six authorized uses: search and
rescue, community service work camps, easement purchases, forest
related educational opportunities, fire prevention and county planning,
and community forestry. When the Secure Rural Schools Act was
reauthorized in 2008, Congress limited the use of Title III funds to
three authorized uses: activities under the Firewise Communities
program, reimbursement for emergency services on national forests, and
preparation of a community wildfire protection plan. As reauthorized,
Title III now directs each participating county to certify annually
that Title III funds were used for authorized purposes. For fiscal
years 2008 through 2012, Title III funds totaled $101 million.
Additional Revenue Sharing and Payment Programs
Along with the payments to States under the Secure Rural Schools
Act, the Forest Service shares 25 percent of net revenues from minerals
receipts, grazing, and other uses of the national grasslands in the
payments to counties program under the Bankhead Jones Farm Tenant Act,
(7 U.S.C. 1010-1012). Payments to counties go to approximately 70
counties in 17 States, and totaled about $15 million in 2011. There are
also payments made under special acts including those in Arkansas for
Smoky Quartz (Public Law 100-446), in Minnesota related to the Boundary
Waters Canoe Area (16 U.S.C. 577) and in Washington for the Quinault
Special Management Area (Public Law 100-638.)
The Forest Service coordinates with the Bureau of Land Management
which administers additional payments to certain counties in western
Oregon under the Secure Rural Schools Act. In addition, national
forests are included in the eligible federal lands for which the
Department of the Interior administers the Payments in Lieu of Taxes
(PILT) program.
Secure Rural Schools Act Successes
For fiscal years 2008 through 2012, the Secure Rural Schools Act
through Titles I, II, and III programs provided nearly $2 billion in
economic support to rural communities. The Forest Service values
relationships fostered with tribal, county officials and other
stakeholders under Title II. By 2012, 118 RACs were established across
the country. By actively engaging community members in recommending
projects, the Forest Service has seen a significant decrease in appeals
and a dramatic increase in successful long-term collaborations.
Each of the 15-member committees represent diverse interests such
as environmental and conservation groups; watershed associations;
forest and mineral development; hikers; campers; off-highway vehicle
users; hunting and fishing enthusiasts; tribal, State and local
government officials and teachers; and officials from local schools.
Following the reauthorization for FY 2012, USDA encouraged all RACs to
recruit new culturally diverse members for the committees. RAC members
learn about the richness of natural resources on the national forests,
and share their knowledge of the natural and social environment.
Members hear one another's views, interests and desires for national
forest management and come to agreement on projects that will benefit
the national forests and nearby communities. Here are a few examples
that illustrate successful projects undertaken with Secure Rural
Schools funding from 2008 to 2012.
In Sierra County, California, a partnership with the Sierra County
Fire Safe & Watershed Council supported by Title II funding has
resulted in a number of high priority projects to reduce hazardous
fuels within and adjacent to the communities within Sierra County and
the National Forest. The fuels reduction projects activities are
resulting in higher level of effective fuels reduction treatments
within the Wildland Urban Interface (WUI). In rural Sierra County, the
partnerships and Title II funds have provided more than $200,000 and
the financial mechanism for success. An additional benefit of these
projects has been an increased level of opportunity for local
employment within the County.
Since 2008, Apache County, Arizona in partnership with the White
Mountain Apache Tribe upgraded a main access road to national forest
lands using Secure Rural School Act funds. These road improvements have
been critical to the treatment of areas within the Tribal Forest
Protection Act (TFPA)--Los Burros project and the removal of materials
under the White Mountain Stewardship Contract. To date, three quarters
of the treatments are completed. This amounts to 12,000 acres of
stewardship treatments of which 3,700 are within the TFPA project. The
public is greatly benefiting from road improvements with safer and more
comfortable access to quality recreation areas. This project has also
improved relations with the White Mountain Apache Tribe.
In northern Utah, the Uinta-Wasatch-Cache National Forest has
worked cooperatively with local counties to implement an aggressive
``War on Weeds'' program with Title II funding. These projects are
vital to successfully treating invasive weed species threatening
critical sage-grouse habitat, watersheds, and high-value recreation
areas. Work is being accomplished through Forest Service and county
crews. Fourteen local youth were hired through the Youth Conservation
Corps (YCC) program to assist in the implementation of this program.
Sequestration
Pursuant to the Balanced Budget and Emergency Deficit Control Act
of 1985, as amended by the Budget Control Act of 2011 and the American
Taxpayer Relief Act of 2012, the Secure Rural Schools account is
subject to sequestration. When payments were made to counties, the
Forest Service opted to make full payment. The reduction to Forest
Service's Secure Rural Schools program, Special Authorities, and the 25
percent fund required by sequestration is $16.7 million or 5.1 percent
of the amount subject to sequestration. The Forest Service will very
soon notify States of the impacts. Communities will be informed of
potential options including repayment or other reductions.
Conclusion
The Secure Rural Schools Act has provided more than a decade of
transitioning payments to eligible States and counties to help fund
public schools and roads and provided predictably declining payments to
States to transition to the 25 percent payment. In addition, it has
also created a forum for community interests to participate
collaboratively in the selection of natural resource projects on the
national forests, and assisted in community wildfire protection
planning.
Thank you for the opportunity to discuss this program with the
Committee. The Secure Rural Schools Program has successfully
strengthened rural economies and developed important collaborative
working relationships between the Forest Service and partners. The
Administration supports reauthorization with mandatory funding and
included a proposal in the FY2013 Budget. The original intent of the
Secure Rural Schools program was to provide temporary assistance to
communities as they transition away from timber dependent industries.
The 2013 Budget provides long-term economic development opportunities
by doubling funding for economic development and forest restoration
projects, while ramping down payments to communities over the five year
authorization period.
We would be happy to answer any questions you may have.
The Chairman. Thank you very much, Chief. We'll have some
questions in a moment.
Ms. Haze.
STATEMENT OF PAMELA K. HAZE, DEPUTY ASSISTANT SECRETARY FOR
BUDGET, FINANCE, PERFORMANCE AND ACQUISITION, DEPARTMENT OF THE
INTERIOR
Ms. Haze. Good morning.
The Chairman. There you are.
Ms. Haze. Good morning, Chairman Wyden, Senator Murkowski
and committee members. Thank you for allowing me to be here to
testify on behalf of the Department of the Interior and to talk
about Secure Rural Schools and the Payment in Lieu of Taxes
program.
These 2 programs are good examples of the way in which the
Federal Government can be a good neighbor to local communities.
These 2 programs provide funds to counties that help them to
pay for ongoing community services. In the case of Secure Rural
Schools, promote enhancement of forest ecosystems and forest
health, just as Chief Tidwell was explaining.
The Department of the Interior's lands and programs benefit
from this relationship because the emergency response,
transportation and other services provided by counties and
other jurisdictions help to provide access for people and
services that are needed to operate and maintain parks,
forests, refuges and other public lands. We work closely in
partnership with the Forest Service to administer the Secure
Rural Schools program.
In the Department of the Interior Secure Rural School
payments are made by the Bureau of Land Management. BLM makes
payments annually to 18 counties in Western Oregon that include
revested Oregon and California grant lands. Beginning in 1994
and including the most recent payments, BLM has allocated 1.6
billion in Secure Rural Schools funding. Most recently payments
were made to those counties by BLM in February including
revenues, fees and receipts collected in 2012, a total of 36
million was distributed to those 18 counties. We expect to
allocate an additional 2 million later this week or the
beginning of next week.
We support reauthorization. If the Secure Rural Schools
program is not reauthorized payments would return to the
historical revenue sharing formula and O and C counties would
receive 50 percent of receipts collected on O and C lands. With
estimated receipts of 15 to 20 million the payments to the
counties would be within the range of 7 and a half to $10
million.
BLM has made improvements in its administration of the
Secure Rural Schools program based on the recommendations made
by GAO. BLM has strengthened its oversight, revamped its Secure
Schools Act website, hosted frequently asked questions, changed
its certification form and conducted outreach to the counties.
The relationship we have with counties throughout the
Nation is important. We value that relationship including our
ability to make Payments in Lieu of Taxes. Local jurisdictions
cannot tax Federal lands. The PILT program issues payments to
counties to make up for the lost tax revenue. PILT funds
supplemental and other payments shared with States and counties
that are generated on Federal lands.
For example, mineral leasing payments to States are
expected to be over $2 billion this year. Geothermal revenue
payments to counties are expected to be $4 million this year.
Since the PILT program began in 1977, a total of $5.9 billion
in PILT payments has been allocated to counties.
In 2012 we made payments to more than 1,900 counties. Last
June a total of $393 million was distributed to counties
throughout the Nation. We use a formula that is dictated by the
law based on acreage, population and considering prior year
revenue payments. The acreage amounts and population rates are
adjusted each year for inflation.
Each year in formulating the payment we work closely with
Interior Bureaus, the Forest Service and other Federal agencies
to ensure that we have accurate acreage data on which to base
the payment. We seek input from States on the amounts of prior
year revenue payments that are retained by counties. Our data
is audited annually. We regularly meet with counties to keep
them informed of changes and provide training as requested. We
issue and post information about the payments publicly to
ensure transparency.
Since the program was authorized in 2008 and funded through
mandatory appropriations, we have been able to provide the full
level of entitlement to counties. Prior to 2008 PILT was funded
through annual appropriations. During the years 1995 through
2007 when it was funded from appropriations, payment amounts
ranged from 41 to 77 percent of the entitlement level.
We make our next payment this coming June. It is subject to
sequester of 5.1 percent.
We support reauthorization of this program.
This concludes my statement. Thank you. I'm here to answer
questions.
[The prepared statement of Ms. Haze follows:]
Prepared Statement of Pamela K. Haze, Deputy Assistant Secretary for
Budget, Finance, Performance and Acquisition, Department of the
Interior
Mr. Chairman, Ranking Member Murkowski, and members of the
Committee, I am pleased to have the opportunity to testify today on the
Department of the Interior's Payments in Lieu of Taxes (PILT) Program
and the Secure Rural Schools (SRS) Program. The Administration supports
ways that the Federal government can fulfill its role of being a good
neighbor to local communities, such as through PILT and SRS.
Secure Rural Schools Act
The Bureau of Land Management (BLM) manages the Secure Rural
Schools program in concert with the U.S. Forest Service. BLM
administers the Community Self-Determination Act payments as amended
(P.L. 106-393) for nearly 2.4 million acres of BLM-managed public lands
located in 18 western Oregon counties, known as the ``O&C''. The
Department of the Interior defers to the U.S. Forest Service in matters
regarding activities on their lands.
O&C County Payments
The Secure Rural Schools Act builds upon the foundation laid in
1937 with the Revested Oregon and California Railroad and Reconveyed
Coos Bay Wagon Road Grant Lands Act (the O&C Lands Act). Under the O&C
Lands Act, the 18 O&C counties receive yearly payments equal to 50
percent of receipts from timber harvests on public lands in these
counties.
Between 1989 and 1993, income to O&C counties from timber harvests
dropped significantly. Congress enacted ``safety net payments'' to
stabilize income flow to timber-dependent counties in 1994 (P.L. 103-
66). In 2000, Congress enacted the Secure Rural Schools Act, which
allowed O&C counties to receive a payment equal to the average of their
three highest timber receipt years from 1986 through 1999. Under the
Act, the counties also elect the percentage of the payment to be
distributed directly to the counties (Title I), and the remaining
percentage to be allocated between Title II projects (administered by
the BLM), Title III projects (administered by the counties), or
returned to the Treasury.
The payments have been reauthorized three times, most recently
through 2012 as part of the Moving Ahead for Progress in the 21st
Century Act (P.L. 112-141). Since the law has now expired, absent
reauthorization, payments to the 18 counties in western Oregon will
revert to levels under the O&C Lands Act. The President's 2013 Budget
proposed to reauthorize the program for five years beginning in 2012
and continuing through 2016 and modify it over the long term.
We understand the importance of these funds to the viability of
western Oregon counties in support of county projects and local
schools. On February 5, 2013, BLM distributed the majority of the
Secure Rural Schools payments for 2012, totaling approximately $36
million. Pursuant to the Balanced Budget and Emergency Deficit Control
Act of 1985, as amended by the Budget Control Act of 2011 and the
American Taxpayer Relief Act of 2012, the Secure Rural Schools account
is subject to sequestration. When payments were made to counties,
Interior held back 10 percent of the scheduled payments in preparation
for the possibility of sequestration. The reduction to Interior's
Secure Rural Schools program required by sequestration is $2.0 million
or 5.1 percent of the amount subject to sequestration. We are working
to meet the necessary funds control requirements as quickly as possible
to allow BLM to issue the balance of payments to the counties as soon
as we can.
Payments In Lieu of Taxes (PILT)
The PILT Act (P.L. 94-565) was passed by Congress in 1976 to
provide payments to local governments in counties where certain Federal
lands are located within their boundaries. PILT is based on the concept
that these local governments incur costs associated with maintaining
infrastructure on Federal lands within their boundaries but are unable
to collect taxes on these lands; thus, they need to be compensated for
these losses in tax revenues. The payments are made to local
governments in lieu of tax revenues and to supplement other Federal
land receipts shared with local governments. The Department has
distributed more than $5.9 billion in PILT payments since these
payments began in 1977.
While PILT payments are provided without conditions on their use,
we know that many counties and other local jurisdictions rely on PILT
payments for support of critically important services and programs,
including emergency services such as fire and rescue, housing social
services, and transportation.
The annual PILT payments to local governments are computed based on
the formula that is contained in the law, which considers the number of
acres of Federal entitlement land within each county or jurisdiction,
the population, and prior year revenue payments made to the
jurisdiction.
Federal entitlement lands include lands within the National Forest
and National Park Systems, those managed by the Bureau of Land
Management (BLM), those affected by Corps of Engineers and Bureau of
Reclamation water resources development projects, and certain other
Federal lands. The formula for calculating PILT payments considers the
amount of certain Federal land payments received by the county or local
jurisdiction in the preceding year. These payments are made from
Federal revenue generating programs (such as receipts from mineral
leasing, livestock grazing, and timber harvesting) that the Federal
Government transfers to the counties using formulas in laws such as the
Mineral Leasing Act.
Prior to 2008, the amounts available for PILT payments to local
governments required an annual appropriation by Congress. In 2007, the
last year that PILT funding was subject to appropriation, PILT payments
were $232.1 million, comparable to 64.7 percent of the full authorized
level for counties.
The Emergency Economic Stabilization Act of 2008 (Public Law 110-
343) authorized PILT for five years as a mandatory program, under which
counties have received the full PILT entitlement level, including
inflationary increases. The most recent payment made to counties in
June 2012, totaled $393.4 million and was distributed to over 1,900
local government units (mostly counties) in 49 States, the District of
Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands.
The FY 2013 Budget proposed a one-year extension of PILT payments
for 2013. The program was extended for 2013, as proposed by the
Administration, in MAP-21, the Transportation Reauthorization Act. As
stated in the Budget, the Administration looks forward to working with
Congress to develop a longer-term strategy for providing sustainable
levels of funding for PILT payments, in light of overall constrained
budgets and the need for appropriate offsets for new mandatory
spending. In the meantime, we plan to make the payments for FY 2013 in
June of this year, consistent with the payment schedule in previous
years.
Unless Congress takes action to undo sequestration and restore
funding before the June payments are made, they will be subject to
reduction. We are still calculating the full entitlement amounts due to
counties for this fiscal year; however, based on the Office of
Management and Budget's Sequestration Report we will reduce the overall
allocation by $20.3 million.
Conclusion
The Administration recognizes that PILT and SRS are important to
local governments, sometimes comprising a significant portion of their
operating budgets. The PILT and SRS monies have been used for critical
functions such as local search and rescue operations, road maintenance,
law enforcement, schools, and emergency services. These expenditures
often support the activities of people from around the country who
visit or recreate on Federal lands.
As we look forward to reauthorization of the programs, the
Department will work to continue to ensure efficient and effective
management of these programs.
Mr. Chairman, this concludes my prepared statement. I would be
pleased to answer any questions that you or the other Members may have.
The Chairman. Thank you very much.
Ms. Fennell, welcome.
STATEMENT OF ANNE-MARIE FENNELL, DIRECTOR, NATURAL RESOURCES
AND ENVIRONMENT, GOVERNMENT ACCOUNTABILITY OFFICE
Ms. Fennell. Good morning.
Chairman Wyden, Ranking Member Murkowski and members of the
committee, I appreciate the invitation to discuss our work on
Title III of the Secure Rural School Act. As you know the Act
was in response to the steep decline in Federal timber sales
which decreased revenues from the national forest managed by
the Forest Service and by some lands managed by the Bureau of
Land Management. Within the Act, Title III authorizes counties
to use payments for certain purposes related to wild land fire
and emergency services on Federal land.
At the request of this Committee we undertook a review of
the oversight and implementation of the 2008 reauthorization of
Title III and reported our findings last July.
My testimony today will describe (1), key findings of our
2012 report and (2), actions the agencies have taken since our
report was issued.
First, in terms of our report:
Overall, we found shortcomings in the areas of oversight,
expenditures and administrative requirements. Now to briefly
address each of these areas.
In terms of oversight, at the time of our report the Forest
Service and BLM had not issued regulations under the Act and
guidance was limited and sometimes unclear. This was concerning
because the Act does not define key terms. For example, the Act
authorizes counties to use Title III funds for emergency
services, but does not specify the types of activities covered
by this term. Agency guidance at the time did little to clarify
this language.
Also agencies had no assurance that they had an accurate
accounting of the amounts of Title III funding spent and
unspent by the counties which is important because the Act
requires that unobligated funds be returned to the U.S.
Treasury.
In terms of expenditures, counties we reviewed reported
using Title III funds in ways that were generally aligned with
the 3 broad purposes specified in Title III. That is wild land
fire preparedness, emergency services on Federal lands and wild
fire protection planning. However, we identified expenditures
by some counties that may not be consistent with specific
requirements of the Act. These include funding for activities
such as clearing vegetation along evacuation routes, updating
911 systems and buying capital equipment. Some counties we
reviewed for example, reported using the funds for purchasing
radios, snowmobiles and trucks for patrols.
In terms of administrative requirements, counties did not
consistently follow Title III requirements which include annual
certification of expenditures and 45 day public notification
periods. We found that some counties closely followed these
requirements while others did not. For example, some counties
did not submit certifications when they spent funds or were
late in doing so.
Second, regarding more recent agency actions:
The Forest Service and BLM issued additional guidance since
our report that clarified the types of allowable uses of Title
III funds complete with explicit examples. We believe this
additional guidance addresses our recommendation.
Also agencies said that they plan to obtain additional
information on the extent to which counties have obligated
their Title III funds.
We also suggested that if Congress chooses to extend Title
III it consider clarifying the Act to make explicit which types
of expenditures are and are not allowable. Given recent agency
guidance there may be less need for changes to the language of
the Act itself. Still it will be important to monitor county's
Title III expenditures in the wake of the additional guidance.
In conclusion, lack of clarity in what are allowable uses
of Title III funds left counties, who were already fiscally
constrained, to make their own interpretations of what is
allowable and what is not. The new guidance should help
alleviate shortcomings we found, but it will also be important
to observe how the guidance gets implemented and what, if any,
adjustments may be needed going forward.
Chairman Wyden, Ranking Member Murkowski and members of the
committee, this completes my prepared statement. I'm happy to
respond to any questions you may have.
[The prepared statement of Ms. Fennell follows:]
Prepared Statement of Anne-Marie Fennell, Director Natural Resources
and Environment, Government Accountability Office
PAYMENTS TO COUNTIES.--SHORTCOMINGS IN OVERSIGHT AND IMPLEMENTATION OF
KEY PARTS OF THE SECURE RURAL SCHOOLS ACT MAY BE ADDRESSED BY RECENT
AGENCY GUIDANCE
Why GAO Did This Study
Under the Secure Rural Schools Act, counties with federal lands may
elect to receive payments to help stabilize revenues lost because of
declining federal timber sales. Under Title III of the act, counties
are authorized to use these funds for certain projects related to
wildland fire and emergency services on federal lands. The act provides
oversight roles for the Forest Service and BLM, requiring them to
review counties' certification of their Title III expenditures as the
agencies determine to be appropriate and to issue regulations to carry
out the act's purposes. GAO reported to this committee in July 2012
that the agencies had provided limited oversight of county spending
under Title III and that, although the projects for which counties
reported using Title III funds were generally aligned with the broad
purposes of Title III, county spending did not in all cases appear
consistent with specific provisions of the act.
This testimony describes (1) key findings of GAO's July 2012 report
on oversight and implementation of the act (GAO-12-775) and (2) actions
the agencies have taken to strengthen oversight of county spending
since the July 2012 report was issued. The testimony is based primarily
on GAO's 2012 report and includes selected updates conducted in March
2013 on actions the agency has taken in response to that report.
GAO is making no recommendations in this testimony. In July 2012
GAO recommended that the agencies strengthen their oversight by issuing
regulations or clear guidance. The agencies concurred, and took action
to implement this recommendation.
What GAO Found
In July 2012 GAO reported that the Forest Service and Bureau of
Land Management (BLM) had taken few actions to oversee county spending
under Title III of the Secure Rural Schools and Community Self-
Determination Act, and that the guidance they provided was limited and
in some cases did not appear consistent with the act. GAO also reported
that some expenditures by selected counties may have been inconsistent
with the act-which may have resulted in part from the limited guidance
available from the agencies-and that reviewed counties did not
consistently follow Title III's administrative requirements.
Specifically, GAO found the following:
Neither the Forest Service nor BLM had issued regulations
under the act, and the guidance the agencies had issued was
limited and sometimes unclear. Forest Service guidance, for
example, did little to clarify language in the act, neither
defining terms from the act nor specifying which types of
expenditures were allowed under the act and which were not. The
absence of clear guidance or regulations was of particular
concern to GAO because the act itself does not define key
terms. For example, the act authorizes counties to use Title
III funds for ``emergency services'' but does not specify the
types of activities covered by this term. Moreover, the
agencies did not have assurance that they had an accurate
accounting of the amounts of Title III funding spent and
unspent by the counties, which is important because the act
requires unobligated funds to be returned to the U.S. Treasury
upon the act's expiration.
The counties GAO reviewed reported using Title III funds for
projects that were generally aligned with the three broad
purposes of Title III-wildland fire preparedness, emergency
services on federal land, and community wildfire protection
planning-but GAO identified certain expenditures by some
counties that may not be consistent with specific requirements
of the act. Such expenditures included funding for activities
such as clearing vegetation along evacuation routes, updating
9-1-1 systems, and conducting routine law enforcement patrols
on federal land. Some counties GAO reviewed reported using
funds to purchase equipment, such as radios and GPS equipment,
sonar equipment, watercraft, all-terrain vehicles, snowmobiles,
and trucks for patrols.
Counties also did not consistently follow Title III's
administrative requirements, which include annual certification
of expenditures, 45-day notification periods to the public and
others before spending funds, and deadlines for project
initiation. For example, some counties did not submit a
certification for certain years when they spent funds, some
counties submitted their certifications late, and some counties
did not consistently follow notification and project initiation
requirements.
Since GAO's report was issued, the Forest Service and BLM have
provided additional guidance to counties, which clarifies allowable
uses of Title III funds. In addition, the agencies reported that they
plan to change their requirements for annual reporting of expenditures
to obtain additional information regarding the extent to which counties
have obligated their Title III funds. The additional guidance addresses
the recommendation in GAO's July 2012 report.
Chairman Wyden, Ranking Member Murkowski, and Members of the
Committee
I am pleased to be here today to discuss our work on the Secure
Rural Schools and Community Self-Determination Act.\1\ As you know, the
act was a response to the steep decline in federal timber sales during
the 1990s, which significantly decreased revenues from national forests
managed by the Department of Agriculture's Forest Service and from some
public lands managed by the Department of the Interior's Bureau of Land
Management (BLM). Counties containing federal lands have historically
received a percentage of the revenues generated by the sale or use of
natural resources on these lands, and the act was enacted in part to
stabilize payments to counties dependent on revenues from federal
timber sales. The act, which covers all National Forest lands and
certain BLM lands in western Oregon, was initially enacted in 2000 and
has been reauthorized several times, most recently for a 1-year
extension in 2012.\2\ Under the act, each county may continue to
receive a portion of the revenues generated from the sale or use of
resources from federal lands or can choose instead to receive annual
payments based in part on historical revenue payments to the county.
Title III of the act authorizes counties to use a portion of the
payments for certain purposes related to wildland fire and emergency
services on federal lands.
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\1\ Pub. L. No. 106-393 (2000), as amended.
\2\ Pub. L. No. 106-393 (2000) covered the period from fiscal year
2001 through fiscal year 2006. Pub. L. No. 110-28, Title V, Sec. 5401
(c) (2007), reauthorized the act for fiscal year 2007. Pub. L. No. 110-
343, Div. C, Title VI, Sec. 601 (2008), reauthorized the act from
fiscal year 2008 though fiscal year 2011. Pub. L. No. 112-141, Div. F,
Title I, Sec. 100101 (2012), reauthorized the act through fiscal year
2012. In this testimony, we refer to the Secure Rural Schools and
Community Self-Determination Act of 2000 as the Secure Rural Schools
Act.
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In 2011, at the request of this committee, we undertook a review of
the oversight and implementation of the 2008 reauthorization of Title
III. We examined the actions the Forest Service and BLM had taken to
oversee county spending under Title III and the extent to which county
expenditures were consistent with the provisions of the act. In July
2012 we reported that the agencies had provided limited oversight of
county spending under Title III and that, although the projects for
which counties reported using Title III funds were generally aligned
with the purposes of Title III, county spending did not in all cases
appear consistent with the act.\3\ We recommended that the Forest
Service and BLM strengthen their oversight by issuing regulations or
clear guidance specifying the types of allowable county uses of Title
III funds. The agencies concurred with this recommendation and have
taken action to do so. We also suggested that Congress, if it chooses
to extend Title III beyond the 1-year reauthorization enacted in 2012,
consider revising and clarifying the language of Title III to make
explicit which types of expenditures are and are not allowable under
the act.
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\3\ GAO, Payments to Counties: More Clarity Could Help Ensure
County Expenditures Are Consistent with Key Parts of the Secure Rural
Schools Act, GAO 12 775 (Washington, D.C.: July 16, 2012).
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My testimony today will describe (1) key findings of our 2012
report related to oversight and implementation of the act and (2)
actions the agencies have taken to strengthen oversight of county
spending since our report was issued. This statement is based on our
July 2012 report, and includes selected updates conducted in March 2013
on actions the agencies have taken in response to our report's
recommendation. To conduct the updates, we reviewed additional guidance
issued by the agencies and interviewed agency officials. Detailed
information about scope and methodology can be found in our July 2012
report. We conducted the performance audit work that supports this
testimony in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform audits to
obtain sufficient, appropriate evidence to provide a reasonable basis
for our findings and conclusions based on our audit objectives. We
believe that the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objectives.
Background
The Secure Rural Schools Act was enacted to help address fiscal
difficulties confronting rural counties having substantial federal
lands and a history of federal timber harvesting. The act, as
reauthorized, comprises three principal titles. Under Title I, counties
are to use the majority of payments they receive for the same purposes
for which they used federal receipts, in most cases for the benefit of
roads and schools. Under Title II, counties may reserve a portion of
the payments to fund certain land management projects that benefit
federal lands. Title III authorizes the use of a portion of the
payments for certain purposes related to wildland fire and emergency
services on federal lands.\4\ These authorized uses include carrying
out certain activities to increase the protection of people and
property from wildland fires under the Firewise Communities program,\5\
reimbursing the county for search and rescue and other emergency
services performed on federal land, and developing community wildfire
protection plans to help protect homes and neighborhoods. Title III
requires counties to follow certain administrative requirements,
including publishing public notices of proposed uses for the payments
and submitting annual certifications of Title III expenditures to
either the Forest Service or BLM, as appropriate, stating that any
Title III funds spent in the previous year went toward authorized uses.
For fiscal years 2008 through 2011, 358 counties received a total of
$108 million for Title III projects, and individual counties received
from about $3,600 to over $2 million in a single fiscal year for such
projects.\6\
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\4\ Counties receiving $100,000 or less in payments may allocate
all of their payments to uses authorized under Title I. Counties
receiving more than $100,000 must allocate from 15 to 20 percent of
their payments to Title II and Title III projects or give the funds
back to the federal government. Counties choose how to divide this
percentage among Title II and Title III, although counties receiving
$350,000 or more in payments may allocate no more than 7 percent of the
payments to Title III projects.
\5\ The Firewise Communities program is a nonregulatory program
administered by the National Fire Protection Association and sponsored
by the Forest Service, Interior, and state forestry organizations. It
is designed to involve homeowners, community leaders, planners,
developers, and others in efforts to protect people, property, and
natural resources from the risk of wildland fire.
\6\ Payments under all three titles of the act totaled over $2
billion for fiscal years 2008 through 2011
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The Forest Service and BLM are responsible for carrying out certain
parts of the Secure Rural Schools Act. Both agencies calculate the
amounts that counties are to receive each year, and both agencies are
required by the act to review the counties' certification of Title III
expenditures as the agencies determine to be appropriate. The act also
requires the agencies to issue regulations to implement the act,
although it does not describe what the regulations are to address or
establish a deadline for issuing them.
Federal Agencies Had Provided Limited Oversight of County
Spending at the Time of Our Report, and Some County
Expenditures May Have Been Inconsistent with the
Provisions of the Act
In our July 2012 report, we found that the Forest Service and BLM
had taken few actions to oversee county spending under Title III of the
Secure Rural Schools Act and that the guidance they provided was
limited and, in some cases, did not appear consistent with the act.\7\
We also found that some expenditures by selected counties we contacted
may have been inconsistent with the act-which may have resulted in part
from the limited guidance available from the agencies-and that counties
we reviewed did not consistently follow Title III's administrative
requirements.
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\7\ GAO-12-775.
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Oversight by Federal Agencies
In July 2012, we reported that neither the Forest Service nor BLM
had issued regulations under the act and that the guidance the agencies
had issued was limited and sometimes unclear. We expressed particular
concern that the agencies had not developed regulations or clear
guidance because the act itself does not define key terms. For example,
the act authorizes counties to use Title III funds for ``search and
rescue and other emergency services, including firefighting, that are
performed on federal land'' but does not specify the types of
activities covered by this phrase.\8\ We concluded that because the
language of the law leaves certain provisions open to varying
interpretations, and available guidance from the agencies had done
little to clarify this language, counties had generally been left to
make their own interpretations about which types of expenditures are
allowable under Title III and which are not.
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\8\ The legislative history of Title III contains almost no
information that clarifies the phrase ``emergency services.''
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To provide guidance, the Forest Service had developed a brief
overview of Title III, which generally echoed wording in the act, and a
``frequently asked questions'' document responding to questions on
authorized uses of Title III funds. At the time of our report, agency
officials told us they believed the frequently asked questions document
provided sufficient clarity for counties to use when considering how to
spend Title III funds.
Officials from several counties we contacted, however, told us they
found these documents to be of little help, and our review of these
documents found that they did not clearly define terms from the act or
specify which types of expenditures were allowed under the act and
which were not. For example, the act authorizes counties to use Title
III funds for ``search and rescue and other emergency services,
including firefighting, that are performed on federal land'' but does
not define the types of activities covered by this phrase. Neither of
the Forest Service documents defined such activities. In addition, in
the frequently asked questions document, the Forest Service listed
eight specific uses of Title III funds-including purchase of capital
equipment, capital improvements, purchase of land, and training for
emergency response-and asked, ``Are Title III funds authorized for the
following uses?'' Instead of answering the question directly, the
documents stated that for certain uses-such as construction of
facilities, purchase of real property, and purchase of vehicles and
other capital equipment-the act does not explicitly authorize these
uses. It then further stated that reimbursement for certain uses-such
as the purchase of replacement equipment damaged or destroyed during an
emergency response or maintenance of vehicles and equipment in
proportion to their actual use for emergency services performed on
federal land-may be allowable. We concluded that such statements were
confusing and unclear.
Further, our review showed that, in addition to being unclear, the
Forest Service's frequently asked questions document appeared to be
inconsistent with certain provisions of the act. For example, the act
authorizes counties to use Title III funds to carry out activities
under the Firewise Communities program to educate homeowners about, and
assist them with, techniques in home siting, construction, and
landscaping. Forest Service guidance documents, however, defined
Firewise Communities as an approach that, among other things,
``emphasizes community responsibility for planning in the design of a
safe community as well as effective emergency response.'' The documents
did not emphasize the act's requirement that counties' Firewise
activities with Title III funds must be limited to providing fire-
related education or assistance to homeowners. Moreover, the frequently
asked questions document stated that developing emergency 9-1-1 systems
under Firewise-which is not an activity clearly authorized under the
act-may also be an authorized use of Title III funds. We raised
concerns that including emergency response in a definition of Firewise
and suggesting that developing 9-1-1 systems may be an authorized
activity under the act could lead some counties to interpret the act as
allowing expenditures that improve the county's emergency response-a
use not clearly authorized under the act.
Our report also raised issues related to counties' certification
that any Title III funds spent in the previous year went toward uses
authorized under the act. For example, we found that the Forest Service
and BLM had jointly developed a process to assist counties in
certifying their Title III expenditures but that the information the
agencies directed the counties to submit-typically the amount spent in
each of the three allowable Title III spending categories but without
further details regarding actual activities-did not allow either agency
to determine whether counties spent their Title III funds
appropriately. In addition, the act requires counties to submit
certifications only for the years they have spent funds, and we found
that neither the Forest Service nor BLM had a process to contact
counties that did not submit a certification to determine if these
counties spent no Title III funds that year or had simply not submitted
the required certification. Some county officials we interviewed said
they had not submitted certifications even when their counties had
Title III expenditures the previous year. Overall, we found that of the
$108 million in Title III payments provided to 358 counties for fiscal
years 2008 through 2011, the counties had certified having spent about
$46 million-or less than half the total amount-by the end of calendar
year 2011. However, because the agencies did not have a process to
ensure an accurate accounting of the amounts of Title III funds spent
and unspent, we concluded that it was unclear whether the amounts were
accurate and that it would be difficult to ensure that counties return
to the U.S. Treasury any funds that remain unobligated upon the act's
expiration, as the act requires.
Consistency of County Expenditures
We also found that expenditures by counties we contacted for our
2012 report did not in all cases appear consistent with the act.\9\
These counties reported using Title III funds for projects that were
generally aligned with the three broad purposes of Title III-wildland
fire preparedness, emergency services on federal land, and community
wildfire protection planning- and some counties reported expenditures
that were clearly authorized by the act. Nevertheless, we identified
various expenditures by some counties that may not have been consistent
with specific requirements of the act, such as the following examples:
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\9\ For our 2012 review, to obtain information about the projects
and activities on which counties spent Title III funds, and their
administrative practices related to Title III, we interviewed, in
person or by telephone, officials from 42 selected counties of the 358
counties receiving Title III funds since the act was reauthorized in
2008. These 42 counties make up a nonprobability sample of counties
selected for variation in both the amounts of Title III funds received
and in geographic location. Because the 42 counties we selected are a
nonprobability sample, the information we obtained from these counties
cannot be generalized beyond these counties; the information did,
however, provide us with an understanding of how the selected counties
spent Title III funds and the actions taken to follow Title III's
administrative requirements.
Wildland fire preparedness.--Title III authorizes counties
to spend funds for activities carried out under the Firewise
Communities program but specifies that these activities are to
involve educating or assisting homeowners with home siting,
home construction, or home landscaping to help protect people
and property from wildfires. Some counties we reviewed used
Title III funds on broad emergency preparedness activities that
may not be consistent with the 2008 act. For example, two
counties we reviewed told us they spent part of their Title III
funds to clear vegetation along roads, some of which are
potential emergency evacuation routes, and others said they
removed vegetation from county lands, parks, schools, or
cemeteries or from larger swaths of land to create fuel breaks-
locations not directly associated with home siting, home
construction, or home landscaping. In addition, four counties
used Title III funds to update their 9-1-1 telephone systems,
according to county officials-an activity not clearly
authorized by Title III (although, as noted, agency guidance
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stated that such an activity may be allowable).
Emergency services on federal land.--Title III authorizes
counties to use funds as reimbursement for search and rescue
and other emergency services, including firefighting, that they
perform on federal lands. Some counties we reviewed spent Title
III funds on activities that may not have been consistent with
this requirement. For example, instead of reimbursements for
specific incidents, a number of counties used Title III funds
to pay a portion of their fire or emergency services
departments' salary and administrative costs, including office
supplies, utility costs, or insurance. As justification for
this approach, these counties cited the high percentage of
federal land in their counties or the difficulty in breaking
out the costs of emergency services on federal versus
nonfederal land. Some counties we reviewed also used the funds
to carry out routine law enforcement patrols on federal land;
officials from one of these counties told us that these patrols
help reduce and deter criminal activity and enhance visitor
safety on federal lands. In addition, some counties reported
that, to maintain access to federal lands, they used Title III
funds to help rebuild flood-damaged roads, and some reported
using funds to purchase equipment, such as radios and GPS
equipment, sonar equipment, watercraft, all-terrain vehicles,
snowmobiles, and trucks for patrols.
Community wildfire protection planning.--The act authorizes
counties to use Title III funds ``to develop community wildfire
protection plans in coordination with the appropriate Secretary
concerned.'' Some counties we reviewed reported Title III
expenditures for wildfire protection planning activities that
may not be consistent with this provision. For example, one
county used Title III funds to purchase vehicles having
firefighting capabilities, as well as other equipment
associated with emergency response. Another county used Title
III funds to contract for firefighter dispatch and suppression
services. Officials from this county explained that county
emergency service units cannot reach certain remote areas
quickly, so they contract with a state agency to provide
dispatch and suppression services during the heavy wildland
fire season, and because the area served is largely federal
land, the county pays for a portion of the contract costs with
Title III funds.
Administrative Requirements
We also found that counties we reviewed did not consistently follow
Title III's administrative requirements. Title III requires counties to
certify expenditures to the Forest Service or BLM annually and provide
45-day notification to the public and any applicable resource advisory
committee before spending funds.\10\ The 2008 act also required
projects to be initiated by September 30, 2011. Our review identified
instances where counties did not follow the requirements, including:
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\10\ Resource advisory committees are established primarily under
Title II of the act and are to contain 15 members representing diverse
local interests. For more information on these committees and Title II
in general, see GAO, Update on the Status of the Merchantable Timber
Contracting Pilot Program, GAO 10 379R (Washington, D.C.: Mar. 4,
2010).
Certification.--Some counties did not submit certifications
at all or submitted their certifications late, some certified
expenditures for multiple years simultaneously, and some
acknowledged putting incorrect information on the certification
form. We found various reasons for counties' not complying with
the certification requirements in the act. Three counties,
according to county officials we interviewed, did not submit
their certifications to the Forest Service for the years they
spent funds because they were unaware of the requirement to do
so. Two other counties submitted certification forms for some
but not all years in which they spent funds, and many counties
submitted their certification forms after the deadline
specified in the act, in some cases because they were initially
unaware of or overlooked the requirement to do so.
Public notification.--The act directs each county, before
moving forward with Title III projects, to publish a proposal
describing its planned use of Title III funds in local
newspapers or other publications, after which the county must
allow a 45-day comment period before using the funds. Some
counties in our review followed only part of the public
notification requirement. For example, some counties published
notices in their local newspapers but did not allow for a 45-
day comment period before moving ahead with projects or
activities, according to county officials and documents, while
other counties issued public notices in some years but not in
others. We also found four counties that did not issue any
public notices on their Title III project proposals; officials
from these counties told us that they were unaware of the
requirement to do so.
Notice to resource advisory committees.--Some counties in
our review did not notify the relevant resource advisory
committees of their Title III projects, as required under the
act. County officials cited a number of reasons for the lack of
notification, including (1) they were unaware of the
requirement to do so; (2) the committee meets only once a year
in the summer, which does not coincide with the county's
timeline for the Title III budgeting process; and (3) the
county planned to notify the resource advisory committee but
did not because a local Forest Service official stated that
resource advisory committees were involved only in Title II,
not Title III projects-even with a specific reference to such
committees in Title III of the act.
Project initiation.--Some counties did not initiate projects
by September 30, 2011, as required by the 2008 act.\11\ County
officials we interviewed provided a number of reasons why they
missed this deadline. For example, counties did not receive
their Title III funds for fiscal year 2011 until 2012, and
officials in one county told us that their county's guidelines
prohibit starting projects before funding is actually received.
Another county had not initiated all of its Title III projects
because some of its previous projects had cost less than
estimated, unexpectedly leaving the county more Title III funds
to spend; county officials told us that they were selecting
additional Title III projects on which to use the extra
funding.
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\11\ The 2012 reauthorization of the act extended the deadline for
initiating such projects to September 30, 2012.
The 2008 act also required Title III funds to be obligated by
September 30, 2012, and officials from nearly all counties in our
review that had spent funds told us they anticipated doing so.\12\
However, as noted, the agencies did not have a process to ensure an
accurate accounting of the amount of Title III funds spent and unspent,
making it difficult to ensure that unobligated funds are returned to
the U.S. Treasury when the act expires.
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\12\ The 2012 reauthorization of the act extended the deadline for
funds to be obligated to September 30, 2013.
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The Forest Service and BLM Have Taken Action to Strengthen
Oversight
In response to our recommendation that the agencies strengthen
their oversight by issuing regulations or clear guidance specifying the
types of allowable county uses of Title III funds, the Forest Service
and BLM provided additional guidance to counties, which clarifies the
types of allowable uses of county funds. In addition, the agencies
reported that they plan to update their expenditure reporting
requirements for Title III funds, so that counties report not only
funds expended the previous year but also amounts remaining
unobligated.
Regarding guidance, soon after our report was issued in July
2012\13\, the agencies updated their websites to provide substantial
additional information on allowable expenditures under the act. Given
that this information includes specific discussion about, and numerous
examples of, expenditures that are and are not authorized by the act,
we believe that this additional guidance addresses our recommendation.
The guidance addressed each of the three main areas of allowable
spending under Title III, as follows:
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\13\ GAO-12-775.
Wildland fire preparedness.--As we noted, several counties
reported expending funds for broad emergency preparedness
activities under the Firewise Communities program that did not
appear consistent with the act because they did not involve
providing fire-related education or assistance to homeowners.
This issue is specifically addressed in the guidance, which now
states that Title III authorizes funds to be ``spent on
Firewise Communities program activities that (1) educate
homeowners in fire-sensitive ecosystems about techniques in
siting (positioning or locating) a home, constructing a home,
landscaping and maintenance around a home . . . .or (2) assist
homeowners in implementing these techniques'' (emphasis in
original). The guidance goes on to list examples of activities
that are authorized-such as disseminating Firewise information
or assisting with ``clean-up days''-and those that are not-such
as updating 9-1-1 systems or clearing vegetation along
emergency evacuation routes or from county lands, parks,
schools, cemeteries, or other larger swaths of land not
directly associated with home siting.
Emergency services on federal land.--Likewise, the guidance
addresses concerns we raised about whether certain projects
related to emergency services on federal land were clearly
consistent with the act. The guidance, among other things,
clarifies the definition of emergency services and provides
lists of expenses that are authorized (e.g., salary or wages of
emergency response personnel deployed during an emergency
response) and those that are not (e.g., routine sheriff's
patrols of national forest roads and campgrounds, cleanup after
a flood event, and purchase of capital equipment or real
property).
Community wildfire protection planning.--The guidance also
addresses concerns we raised about development of community
wildfire protection plans by clarifying authorized uses and
illustrating those that are not authorized, including the
implementation of activities described in such plans.
Regarding annual reporting requirements on the part of counties,
both agencies updated the certification form for counties to use in
certifying Title III expenditures, so that counties must report not
only on the funds expended the previous year but also on the amount of
their Title III funds that remain unobligated. Such an update is
consistent with guidance provided by Agriculture's Office of General
Counsel in response to a Forest Service request for legal advice on its
role in counties' return of unobligated Title III funds. The update is
likely to allow the agencies a more accurate accounting of the overall
amounts of Title III funds spent and unspent-a need we noted in our
report.
In our July 2012 report, we also suggested that if Congress chooses
to extend Title III beyond the 1-year reauthorization enacted in 2012,
it should consider revising and clarifying the language of Title III to
make explicit which types of expenditures are and are not allowable
under the act. Given that the agencies have issued guidance that we
believe clarifies the allowable uses of Title III funds, there may be
less need for changes to the language of the act itself. Nevertheless,
it will be important to monitor counties' Title III expenditures to
observe whether the incidence of expenditures that appear inconsistent
with the act diminishes in the wake of the additional guidance the
agencies have issued.
Chairman Wyden, Ranking Member Murkowski, and Members of the
Committee, this completes my prepared statement. I would be pleased to
respond to any questions that you may have at this time.
The Chairman. Ms. Fennell, thank you.
Before we go to questions, colleagues, we've received a
letter from Senator Michael Bennet of Colorado commending the
committee for holding today's hearings on Secure Rural Schools
and PILT. Without objection, we will make Senator Bennet's
letter a part of the record.
The Chairman. Let me begin, if I might, with a question or
2 for you, Chief Tidwell, and you, Ms. Haze.
Our rural communities are really hurting. You know, they
are watching all the bickering going on in Washington, DC. What
I find when I have town hall meetings around our State in every
county, every year, people just say, who is going to do
something back in DC to change things and put in place some
policies so that the rural economy can get going again?
That's what this is all about in just, kind of, breaking it
down in sort of simple, understandable English. So what the
committee has essentially been looking at is this idea of a
dual track kind of strategy.
On one hand, both short-term and long-term we would be
trying to get the timber harvest up. We think we can do that,
particularly Chief, with collaborative approaches like you have
stressed today. Do it consistent with our environmental laws.
Then we've also said we're going to have to try some fresh
approaches which is what we're trying to look at with revenue
sharing, bringing together communities where there's Federal
land and Federal water. It's why we're saying we've got to have
Secure Rural Schools for essentially some period of time in
order to start looking at these broader approaches.
So my question to you, Chief, and Ms. Haze, first of all is
what can be done now, this point, this year, quickly to take
steps to boost the timber harvest and do it in line with
environmental laws? Chief, I think you've given us some ideas
with your approach for collaborative kinds of efforts because
clearly a healthy forest will help equal a healthy economy.
But what can be done short term so these communities can
get moving again and see some real progress?
Mr. Tidwell. Mr. Chairman, you know, last year we came out
with our accelerated restoration strategy that identified the
65 to 83 million acres that we need to do restoration on. Along
with that we made the commitment to increase the amount of
acres that we treated along with the outputs. The key output,
of course, is saw timber, to increase that 20 percent over the
next couple years.
We made our target this last year. We are focused to do
everything we can to be able to stay on that because we
recognize the need of restoring these lands. Out of the 65 to
83 million acres there's over 12 million acres that we have no
choice but to use some form of timber harvest to be able to
restore those lands. That's what we want to continue to focus
on, to be able to make sure we can sustain the infrastructure,
but at the same time to be able to get more of this work done.
So we are continuing to stay focused on that. Your support
for these collaborative efforts, and I can use your State as a
perfect example, of where people are coming together today and
finding ways to be able to reach agreement and move forward.
There's a greater understanding about the need to restore these
lands before we lose forest to whether it's fire, insect and
disease or ongoing drought, wind storms, whatever. Those are
the things that are really resonating with rural economies,
rural America today.
The Chairman. Chief, when you say restoration work
particularly in these areas susceptible to insects and disease,
what you just said in response to my first question is that it
really means, in many respects, increasing the timber harvest.
Is that correct?
Mr. Tidwell. It is. Especially on that 12 and a half
million acres that we believe we don't have any other tool that
we can use.
The Chairman. Good.
Chief, I want to let my colleagues ask some questions so
I'll get into more on a second round. But I just want to again
appreciate your leadership, particularly on the East side of
Oregon even before our bill has been enacted. We're seeing
progress in terms of litigation going down and the cut going
up. So I thank you for it.
I do want to ask you, Ms. Haze, the same question because,
as you know, the Chief with the Forest Service is talking about
the East side where we've made some progress. But on the West
side, the Bureau of Land Management manages the O and C lands.
These communities also feel like they've just been flattened.
So we've got to get the cut up. We've got to get the harvest up
both short term and long term.
What steps can you take, starting now, to do that?
Ms. Haze. So Secretary Salazar has talked about a
commitment to restore healthy habitat and provide sustainable
timber harvest.
BLM initiated their 3 collaborative pilot projects in
Roseburg, Medford and Coos Bay. Those are underway and working
with and with the input of Drs. Norm Johnson and Jerry Franklin
to look at sustainable, collaborative projects. BLM is in the
process of implementing 7 more.
So I think that in combination with the reauthorization of
Secure Rural Schools are the short term needs.
The Chairman. So what can be done now to increase the
harvest? I understand the plans that have been laid out in the
past. I think you know from my conversations with the agency,
so many of these communities say that the agency isn't hitting
the targets.
So what can be done to increase the harvest now?
Ms. Haze. So my understanding is that BLM is planning to
work toward their target this year. I think we have some
evaluating to do based on the sequester that is impacting all
of our programs. I don't think we have a final answer for the
impacts of that yet.
The Chairman. Can you get me an answer to that question?
Ms. Haze. Yes.
The Chairman. Because in those hard-hit communities, in
Josephine County, in Coos, and places like Cottage Grove, you
know, rural counties. if they hear the words that you talked
about, planning to hit the target, evaluating the effort-these
communities that have been hit so hard, that's not going to
address their concerns. They want to hear specifics.
Can you get me an answer, say within the next 10 days,
specifically on what will be done on this point to increase the
harvest?
Ms. Haze. Yes, Chairman.
The Chairman. OK. Thank you.
The Chairman. Senator Murkowski.
Senator Murkowski. Thank you, Mr. Chairman.
I'll continue on what we're going to do to increase the
harvest. You know, even in the areas where we have agreed as to
what the plan may be, we're not seeing that, we're not seeing
the production there. In the Tongass the current land
management plan calls for cutting of 267 million board feet a
year yet we're barely getting 15, 1, 5, million board feet per
year.
So, you know, the frustration, of course, is huge. We have
had many opportunities to discuss just this about well, OK,
we've agreed that this is where we should be with the harvest.
We're not even--it's not only we're not in the ball park. We're
not even in the same town here when we're talking about what
we're putting up for sale or what our goal is and what we are
achieving.
Now Ms. Haze, you indicate that because of sequester we're
going to be seeing even less. As a member of the Appropriations
Committee we got a letter from the Department of Ag saying that
due to sequestration the amount of Forest Service timber volume
offered would be and this is offered nationwide, would be
reduced by approximately 15 percent. The sequester is 5
percent. Not quite sure why we're seeing a reduction in the
board feet of 15 percent.
Again, when you're a community that is looking for an
answer here even before sequester we weren't even close to
getting where we needed to be in terms of the timber harvest.
Now it would appear that we've got, I don't know, an excuse to
do even less. What's our problem here? Why can't we even begin
to start achieving what we have agreed to in places like the
Tongass?
I recognize we're talking a lot about restoration here
which is important. But we have to recognize that in the
Tongass it's not an issue of thinning because we have disease.
We need to be working on our timber sales.
I'm going to give you a chance to answer that Chief
Tidwell. But I want you to also respond in context with the
Governor of Alaska's recent move toward increased timber
production within the State. He's appointed a State Timber Task
Force to come up with some ideas.
One of the recommendations is to create a 2 million acre
State forest out of our national forest system lands. Would
something like this help us, a smaller pilot project to test
the effectiveness of State timber management? We're just not
seeing it at the Federal level. We've got to do something.
So can you speak to not only the idea of the State's
proposal, but how we can do better to keep the agreements that
have already been made?
Mr. Tidwell. Senator, I know that we need to deliver
because we've talked about the opportunity to transition to
second growth harvest there in Southeast Alaska. A key part of
that is for us to be able to deliver each year on our targets
to be able to provide that bridge of material from the old
growth harvest until we can move to the second growth.
Last year when I was at a hearing with you I told you we
were going to sell 80 million board feet from the Tongass. We
didn't make that target. We sold about 53, 54 million this
year.
This coming year the forest is telling me that they are on
target to sell 100 million. They've got to get a difficult
decision out. But that's the focus that we're on to be able to
demonstrate that we can deliver on our part to be able to move
forward with this transition strategy.
Senator Murkowski. Even though the Tongass management plan
calls for 267 million board feet. So what we're saying is, is
that we're delivering a little bit more, but we're not even
half way to what the Tongass management plan calls for.
Mr. Tidwell. The Tongass forest plan, that's an allowable
harvest level. It's not a target. That term that we used in the
planning it's, I think, in times has been misleading. But all
that does is it indicates what is allowable, what's the
capability within our suitable timber lands to be able to
produce at a sustainable basis.
Our targets are driven by really what our budgets are and
what we feel we can get accomplished every year. So when I talk
about the 80 million last year, the 100 million this year, it's
based on what we feel we can actually get prepared. Actually it
will also sell.
In the past we used to just--we put up a lot of sales. We'd
offer a lot of sales. Our target used to be based on what we'd
offer. But we changed that a few years because we wanted to get
the work done. So our target now is just for what we actually
sell, not just what we offer.
Senator Murkowski. So, Chief, given the budget constraints
that we are dealing with, what do you think of the State's
proposal to allow for State management of State forest?
Mr. Tidwell. You know, this issue has come up in the past.
I think it's--we have different mandates. We have different
laws that represent what the public wants from their national
forests. That's what governs the management of our national
forests. It's based on the public involvement in our planning
process.
Senator Murkowski. But the public also needs some jobs or
they can't live there.
Mr. Tidwell. They do need the jobs. That's why we're
focused on moving forward with our transition plan to be able
to move to second growth that I believe will be able to produce
more jobs than what we have in the past.
Senator Murkowski. Chief, you and I have both acknowledged
that in order to get to that second growth we can't just snap
our fingers. We can't make those trees grow any faster. In the
meantime you've got an industry that is dying out. The trees
might be able to transition but the people, the families, the
economic opportunities that were there, won't be able to hold
on.
So I think we recognize that things don't measure up as
neatly in real life as they might on paper. So we've got a lot
more work to be doing together.
My time has expired. But we'll continue this questioning.
Thank you.
The Chairman. Thank you, Senator Murkowski.
Senator Landrieu.
Senator Landrieu. Thank you.
Mr. Chairman, I am so looking forward to helping us figure
this out because I think if we can it will be a tremendous help
to our entire country and to the people that live in the
communities that Senator Murkowski and Senator Wyden were just
referring to and a real benefit to our environment as well.
Let me ask this question to Chief Tidwell and Ms. Haze. Do
you all have a total amount of money that comes into the
Federal Government from all of these sources that we've talked
about, harvesting, grazing, geothermal, etcetera, etcetera,
etcetera, from Agriculture and Interior? Can you give me a
rough estimate of what that dollar amount is every year?
If you can't I really do need somebody to submit that to
the committee by close of business today because you should
have it.
How do----
Ms. Haze. Senator Landrieu, for the Department of the
Interior I can tell you we collect approximately $13 billion a
year in revenues, fees, receipts.
Senator Landrieu. From onshore and offshore?
Ms. Haze. Onshore, offshore, grazing, aeration.
Senator Landrieu. Offshore, everything.
How about Agriculture?
Ms. Haze. Agriculture is in there.
Senator Landrieu. So it's about $13 billion.
Ms. Haze. Thirteen billion.
Senator Landrieu. So this issue really is about looking at
that 13 billion and figuring out a way to better allocate it
for the communities that actually produce it, that produce
that, to share, in a way, that helps them to achieve some of
the objectives that the chairman and the ranking member and
some of us have in mind. So, we're working off of a $13 billion
income? Is that it?
Ms. Haze. That's right.
Senator Landrieu. OK.
Let me ask how much of that money comes from onshore and
how much does come from offshore?
Ms. Haze. That's a good question. I should know that.
Senator Landrieu. I think it's--what is it? It's 6.3 from
offshore and so it's about equal. It's a little bit more from
onshore. 6.3 from offshore.
Those offshore revenues come from what States, off the
coast of what States?
Ms. Haze. Louisiana.
Senator Landrieu. That's good. What else?
[Laughter.]
Senator Landrieu. What other States?
Ms. Haze. Mississippi? Florida?
Senator Landrieu. Nope, not Florida, Alabama.
Ms. Haze. Alabama. You know better than I do.
Senator Landrieu. Mississippi, Louisiana, Alabama, a little
bit of California and Texas, slightly a little bit in
California.
So 4 States are producing 6.3 billion and then all the rest
of the States, including a little bit from Louisiana, I think,
although we only have 2.5 percent of our land is Federal,
completely different than the West which I understand their
dilemmas. But the rest of that comes from, you know, onshore
production.
Now, Mr. Tidwell, let me ask you this. I was very
encouraged that you said that the Administration is interested
in a revenue sharing program for interior States to help them.
But I didn't hear you mention anything about coastal States. Do
you want to elaborate?
Mr. Tidwell. My remarks were about all the States where we
have national forest system lands. So it's 41 States across the
country. So and it's a Secure Rural School. It's 729 counties
that we share that.
Senator Landrieu. Yes, but what about the coastal States
that are producing the 6.3 billion that comes into the Federal
Treasury. I think we've been doing that since when? 1923?
Mr. Tidwell. That is shared. That's through the Department
of Interior's programs that they administer is where that
sharing occurs.
Senator Landrieu. OK. Ms. Haze, let's talk to you about
that?
Since 1923 we've produced, you know, literally billions and
billions and billions of dollars. Are you aware of what's
happening along the Gulf Coast with the erosion that is going
on that's the greatest erosion on the North American continent?
Are you at all aware?
I know that you focus on the interior of the country, but
the exterior is in really, tremendous, stress and strain
whether it's Louisiana or Massachusetts or New Jersey?
Ms. Haze. So, it's fair to say I focus on the financial
aspects of the Department. I did actually once visit the
wetlands land down in Lafayette, Louisiana and learned a great
deal about the erosion along the coast there.
Senator Landrieu. It's pretty bleak. I mean, we're losing a
football field every 30 minutes. It's the largest erosion
underway on the whole continent including, you know, Mexico,
Canada and the United States. We're having a little difficultly
with the Administration, kind of, even recognizing that it's
happening.
So you might want to take this message back and let them
know that I'm looking forward to working to find a way forward
for PILT and for Rural Schools and fire. But you know, we also
have some coastal issues that need to be dealt with as well
with the resources that we help to provide for the country.
Thank you.
The Chairman. Thank you, Senator Landrieu.
Just before we go to our next Senator, Senator Risch, on
the point that you're making and I think it's a very good one
about finding, you know, common cause. I did have a chance to
talk to Secretary Vilsack recently. Of course, the Department
of Ag is your Agriculture and the Forest Service intertwined.
He is very interested in exploring with us this whole revenue
sharing concept and trying to find common cause between the
communities where there's Federal land and Federal water. So I
think we've got some good conversations just beginning.
Alright, let's see. Senator Risch has departed.
Senator Barrasso.
Senator Barrasso. Thank you very much, Mr. Chairman.
The Secure Rural Schools and Payment in Lieu of Taxes or
PILT programs are distinctly different programs. They are
separate topics but they have equally divergent histories and
stated purposes. I support the PILT program.
The PILT program provides Federal money to county and local
governments to make up for or in lieu of property taxes that
can't be levied on Federal property. PILT payments are simply
the U.S. Government acting as a responsible land owner to help
support essential local government services such as schools and
roads. As in the case with all land owners if the existing
owner is unwilling or can't pay the property taxes then new
owners are needed.
The purpose of the Secure Rural Schools program is
different. That was best summarized, I believe, on the Senate
Floor last year by Senator Merkley when he said, ``It is a
commitment our Federal Government made to rural forest counties
when it determined,'' that's the Federal Government, when the
government, ``determined that it would put environmental
overlays over large blocks of forest land that were dedicated
to timber production with revenue then shared with local
counties.'' I agree with Senator Merkley.
I agree with him that the purpose of the program is to
assist communities impacted by the overlay of Federal
environmental policies. These policies have destroyed rural
communities all across the West. They have forever altered the
life of small towns and counties, especially and to me, has
been not for the better.
They have taken away the economic ability of communities to
survive and to thrive on their own which would be without
Federal Government assistance. As the environmental overlays
were put into place, jobs that supported families and
communities for generations have been lost. The listing of the
northern spotted owl, President Clinton's road less rule and a
whole host of Federal regulations and actions set in motion the
decline and elimination of thriving communities all across the
West.
In 1991, 38 Oregon and Washington counties began receiving
owl guarantee payments as a temporary safety net to soften the
blow to their timber based economy. Prior to the need for owl
payments counties were funded by receiving 25 percent of the
Forest Service's timber sale receipts. They were compensated
and rightfully so to help provide services to the tens of
thousands of people and their families who relied on timbering
for their jobs.
These were thriving communities with an economic base that
created a strong middle class. In the year 2000 when the Secure
Rural Schools act became a law owl guarantee payments were
extended to 721 counties nationwide. The program was only
supposed to be temporary to expire in the year 2006.
However, the environmental overlay of regulations and other
policies of the Federal Government didn't go away. Communities
continued to struggle to survive against the economic barriers
created by Federal policies. Extension and reauthorizations
have occurred in 2007, 2008 and 2012.
Now, I understand why Senator Wyden and others have worked
so hard to continue funding the program. The Federal Government
essentially took away the livelihoods and funding for families
in counties by blanketing the region with environmental
overlays. Regrettably, the same government that imposed the
overlays is now$16 trillion in debt and funding existing
programs often comes at the expense of others.
I have a poster behind me. This poster shows that last
year's transportation bill included 1 year extension of PILT
and SRS. The 1-year extension was paid for through tax
provisions and by using 10 years of funding from the abandoned
mine land program that was designated for the State of Wyoming.
It is the classic robbing Peter to pay Paul scenario.
It's not sustainable. It did not solve the problem.
The solution is not to make communities dependent on
Federal payments which is the path we're currently on. Rather
the solution is to remove the environmental overlays that
Senator Merkley referenced in his floor speech. I believe this
can be done in a way that provides both economic growth and
environmental stewardship.
Rural counties are clamoring for a hand up, not a hand out.
We need more active management to foster healthy, vibrant
forests. The Vancouver Sun reported March 1st, ``There's no way
North American's stud lumber sawmills will be able to keep up
with the recovering U.S. housing market.'' European sawmills
will likely make inroads into North America.
Rural counties that were once robust can become so again.
So I'm encouraged by statements I'm hearing and comments made
over the last few months by Members of Congress and Governors
from both parties. The future of counties should not be
dependent on the uncertainty of the Federal Government budget.
It's time to empower rural communities to create their own
financial stability. With national deficits soaring, bark
beetle infestation and excessive fuel loads feeding
catastrophic fires, we can no longer afford environmentally or
economically to passively manage our forests and for rural
counties to depend on the Federal dollar.
So my question, Mr. Chairman, as my time is expired, is are
there specific actions that the Forest Service and BLM are
going to take to limit the impact of environmental overlays and
go ahead and actually increase timber production and revenue
for the counties involved?
You can answer.
The Chairman. I think you ought to be in a position to
respond to the Senator's question. So, go ahead, Chief.
Mr. Tidwell. Senator, in my earlier remarks I talked about
the effort we have to increase the amount of tree limits
occurring which is resolving an increase in harvest.
You know, I've spent a majority of my career dealing with
the conflict and the controversy around public land management,
35, now 36 years in the Forest Service. What I'm seeing today
is how groups are coming together. Diverse interests are coming
together and agreeing about the type of work that needs to
happen on the landscape.
We are seeing a significant change in the amount of work
that we're getting done. I think the more that we can embrace
these collaborative efforts, to support those efforts or bring
people together because there's more and more of a recognition
of the things that you've pointed out of the need for us to do
more treatment, to do more timber harvest to reduce the fuels,
to reduce the insect and disease outbreaks. Because of that,
that's why we were able to, I felt confident, that I could put
the Agency's reputation out there to say that we would be
increasing harvest over the next few years and with a flat
budget with no expectation that we'd see an increase.
But because--but the reason for that is because it is
collaborative efforts. The other thing is that we've recognized
that we need to do analysis for much larger areas. We used to
spend a lot of time doing projects for 500 acres, maybe 1,000
acres.
Today we recognize we need to be doing analysis on tens of
thousands of acres at one time. This has been a reach for us.
But I'll tell you we've have success. Up in South Dakota last
year they did one EIS for 248,000 acres that they'll be able to
get in there for the 7 years and do whatever treatment they
need to on that land.
That along with as we move to more and more long term
contracts so that our mill owners and our loggers know that
they have something that provides some certainty so that they
can invest in new equipment, make the investment to hire
people, make the investment in their mills. These are things
that are starting to change the dynamics that we've been
dealing with for the last few decades. Those are the things
that we're really focused on to be able to increase the
restoration work, increase the amount of harvest that's coming
off of the national forests.
Senator Barrasso. Thank you, Mr. Chairman.
The Chairman. I thank the Senator.
Senator from New Mexico.
Senator Heinrich. Thank you, Chairman.
I want to thank both you and the Ranking Member for having
this hearing. This is an issue where there's actually quite a
lot of agreement. I think concern on both sides of the aisle,
something that touches communities throughout the Intermountain
West.
Chief Tidwell, good to see you again. I wanted to point out
and I appreciate your comments in your earlier testimony
because you touched on some of the things that I hear
consistently back home. In New Mexico many counties use their
SRS funds to carry outward for stewardship projects. They
reduce the risk of catastrophic wildfire to communities.
New Mexico counties also support local fire fighting and
emergency response units that are viable when fire strike close
to homes and businesses as well as search and rescue efforts. I
know that the Forest Service works closely with forest
communities to prepare for wildfire and to respond to
catastrophic wildfires.
What role do SRS funds play in making that collaboration
possible for those communities?
Mr. Tidwell. There's a couple ways. The first thing with
Secure Rural School payments it provides that certainty to the
county so they know what they can plan on for the funding
they'll have for their roads and schools program.
But the second part is the Title II and Title III funds
that the counties can choose to basically share some of the
payments to do work on the national forest or to be able to do
the wildfire community protection planning or also deal with
emergency services.
The other key part of this is also the Resource Advisory
Committees. Because of the requirement when Secure Rural
Schools was first authorized it required this diverse set of
interests to come together and often in places for the first
time. It was a requirement. It provided the catalyst, the
incentive of these diverse interests to come together and to be
able to find ways to agree on what type of work should go
forward.
Because of that, I really believe that Secure Rural Schools
should get a lot of credit for helping us to really kick start
the collaborative processes that we see across the country. So
it's been an additional benefit that I don't even think the
Chairman, when he worked so hard on this initially, that he
recognized really that this additional benefit was going to
come out of this act. So I just want to make--I want to stress
that because it goes way beyond the payments.
Because of these efforts, these diverse interests that have
come together, we've seen some diversification of economies in
these communities. It's really helped to provide sustainable
economies in these countries. Of course, by working together to
deal with the wildfire threat that you, especially in your
State, have had to deal with the last 2 years.
Senator Heinrich. If that funding stream were not available
to these counties how would it also change how the
responsibilities that the Forest Service has and what you would
have to do differently in order to fill that void in terms of
additional stewardship projects, additional fire management and
interface issues? How would it change things if this funding
stream weren't there for the counties to be a good local
partner?
Mr. Tidwell. It would stress our use of our appropriated
funds. It would, I think, really limit what the counties can do
to be a partner. The counties want to be a partner in this
work.
That's the other benefit that comes from Secure Rural
Schools. It allows them to make the decision to dedicate some
of their funding toward this work. So it lets them be at the
table. Helps them to be able to be a better partner as we work
together.
Without these funds it will be difficult, especially in
today's budget climates, for us to be able to find the
additional appropriations to make up for the loss of this, the
work that gets done with these funds.
Senator Heinrich. There's been some discussion in Congress
about returning to the model where county payments are
dependent on revenues generated by our national forests. I'll
be the first to admit that New Mexico forests are a little
different than Oregon and Washington and Alaska in that we have
very arid forests where oftentimes sometimes it takes 200, 300
years to grow a mature Ponderosa Pine. So sometimes we need to
pull biomass off the forest. But we're not producing sawmill
timber as a result.
So I'm curious what you think that--what would that, you
know, that linkage of revenues to county payments mean for
forest management, particularly in Southwestern arid States?
Mr. Tidwell. Senator, I don't anticipate any change in what
we're doing. The work that's being done on the national forests
is driven by what the public wants and what the land needs. So
the amount of harvest, whether through timber sales or
stewardship contracting, I don't think that's going to change.
What will change is the need to get more of this work done.
We're going to continue to do that, with or without. But I
wouldn't expect to see any change in the management.
Senator Heinrich. OK. Thank you very much, Chief.
The Chairman. Thank you, Senator Heinrich. We're very
fortunate to have an actual forester as a member of this
committee.
Senator Risch, welcome.
Senator Risch. Thank you very much, Mr. Chairman.
I--this is an issue that obviously in a lot of our States
is critically important. I was interested in the GAO report. I
hadn't read it until we--I got ready for this hearing.
This is no reflection on you, Ms. Fennell, but let me tell
you something. I have real confidence in the county's being
able to spend this money. Indeed I have more confidence in the
county's being able to spend this money than I do the Federal
Government.
I have no doubt they'll make some mistakes. But I can
guarantee you they won't be nearly as big a mistake as the
Federal Government would make if they were spending the money.
So appreciate what you're doing, but they're probably going to
do alright out there.
In this town it's kind of hard to explain this to people,
but Senator Wyden knows this and Senator Murkowski knows this.
When you go out into the--well and Senator Heinrich knows this
too. When you go out into the hinter lands you'll find counties
that are managed pretty well by people who are well educated
and well schooled in what they're doing. Then you'll find other
counties that are run by the people.
So as a result of that it's less formal than what we're
used to. So you're going to find those kinds of things when you
go out there. But in any event, keep up the good work. But I
have real confidence in the county's being able to make this
work if we get them the money.
Thank you, Mr. Chairman.
The Chairman. I thank my colleague.
Let's go to a few additional questions. I want to stay with
you, Chief and you, Ms. Haze, to go into some of what's being
debated with respect to our approaches for the future.
I've tried to describe our approach both short term and
long term as a dual track. So we get the cut up and
particularly, Chief, you've mentioned doing that through the
collaborative approach which I think makes a lot of sense. We
recognized that Secure Rural Schools is certainly going to be
needed in the short term. There are some approaches for the
future, long term, that involve revenue sharing.
So I call that the dual track. Get the cut up and also
ensure that we have Secure Rural Schools as a kind of bridge.
There are some who are advocating what I call a one track
strategy where they're saying we don't need Secure Rural
Schools. We can just get there by getting the cut up. We get
the volume up that will take care of it.
Now I've already made it clear again and again, probably
more times than colleagues want to hear. I'm for getting the
cut up. But I'm trying to get my arms around the idea of what
level of timber harvest would be needed in the short term to
keep these communities afloat in terms of law enforcement and
schools and essentials and how that would be achievable.
Can you give us some sense of that, Chief, if you just said
we're going to drop Secure Rural Schools and we'll just do it
by getting the cut up? What would that require say, in the next
couple of years?
Mr. Tidwell. Mr. Chairman, to provide the same level of
funding that the counties have received under Secure Rural
Schools on the national forests we'd have to increase our
harvest to 16.8 billion board feet. That's based on today's
prices.
That's the other thing I wanted to stress is that, the saw
timber prices have been going up for the last year which is
very helpful. But before that we were at some of the lowest
prices that I've seen throughout my career. The stumpage value
of the timber coming off the national forests has been at the
lowest point in my entire career. So that too has had a
significant reduction in our revenues.
Hopefully, as the housing market improves and we continue
to expand markets over the biomass, the wood off the national
forests, that we'll see a continued improvement in the markets.
But at today's market it would take 16.8 billion board feet off
just the national forests to provide the same level of revenues
that we provided through Secure Rural Schools last year.
The Chairman. Ms. Haze.
Ms. Haze. So just looking at the numbers. If our payments
to the counties this year was 38 million. If there is no Secure
Rural Schools maximum revenue sharing would be $10 million. So
a 4-fold increase----
The Chairman. In the cut.
Ms. Haze. In the revenues generated. I can't personally
tell you what that means in the cut.
The Chairman. OK.
Just 2 other points to move along quickly as I see Senator
Lee is here and we want to give him another opportunity to ask
questions.
Chief, I especially note your point about the Resource
Advisory Committees. Senator Craig and I, when we talked about
them, we thought they were going to work well because the idea
was they would get people talking who had never talked, you
know, before. But based on what I hear in rural communities,
this is not something that we dreamed up in Washington, DC.
In the smallest nooks and crannies of our State, where the
Federal Government owns land, people say that these Resource
Advisory Committees are working beyond anything they imagined.
That you've got people in the timber industry and environmental
folks, who practically were screaming at each other before,
looking for common ground. It's because a project can't go
forward under a RAC unless you do reach common ground.
So I appreciate what you've had to say. I want you to know,
since we've had some conversations, that as we look to the
future in terms of some of these revenue sharing ideas. We are
going to build on your collaborative thinking and these
Resource Advisory Committee because that has been a part of
Secure Rural Schools.
It probably didn't get a lot of attention because people
want to talk obviously about the finances. But it is making a
difference. It's making a difference in terms of bringing
communities together so we can have jobs and protect our
treasures.
One last question for you, if I might, Chief. As you know
the communities are very concerned about the impact with
respect to the sequester and these payments that have already
gone out to the counties. What can be done to make sure that
these communities are in a position to get funding, even if we
have to get the sequester part resolved? I saw some comments
indicating that it would be taken from the RACs which concerned
me simply because you made the case that the RACs are working
so well.
So what can we tell these rural communities that have just
gotten pounded recently about the prospects of your working
with them so we can make them whole on this situation with the
budget?
Mr. Tidwell. Senator, we're in the process of informing the
States and the counties that the Secure Rural School payments
are subject to sequester. Where we went out ahead and sent out
the title, the Title I and the Title III payments back in
December. We're--for the States that receive Title II we're
going to provide them the option that if they want to just take
the full sequestered amount out of the Title II payment which
will reduce the amount of work that can be done, we'll give
them the option.
I just regret that we're in a position to have to inform
the States that we're going to have to, reduce the Title II.
For the States that do not receive Title II funds we will have
to work with them to get--to recover 5 percent of their
payments.
The Chairman. Chief, I know you didn't dream up the
sequester. I understand that. You're playing a tough hand.
If you'll keep working with me and the committee, there's
just enormous concern in these rural areas that even that
amount which in a lot of programs doesn't sound like, you know,
much. These are communities that are hurting so badly it really
means a lot. I need to keep working with you on it.
Let's, at this point, if Senator Murkowski is acceptable
we'll go to Senator Lee and then we'll go to Senator Murkowski.
We'll start--we've already started the second round.
Senator Lee, welcome and appreciate all your interest on
this.
Senator Lee. Thank you very much. Thanks to you and Senator
Murkowski for accommodating me in this.
Ms. Haze, I've got some questions regarding PILT. PILT is
an important program for my State considering that the Federal
Government owns about two-thirds of the land in Utah. As a
result of that, States like mine depend pretty heavily on PILT
payments. But it's important for us to keep in mind a few
factors including the fact that the cost of having a lot of
Federal land in a particular county goes, I think, potentially
far beyond the lost property tax revenue.
It also, properly understood, has to include all the lost
revenue that would come from economic development that might
otherwise occur on that land. Whether that occurs in the form
of traditional energy development or renewable energy
development, certain kinds of recreational activities that may
or may not occur on the land as a result of its Federal
ownership or any other kind of economic activity.
Now I understand that PILT was not intended to offset the
lost revenue that might come from these lost economic
development opportunities. I get that. But this context makes
it important for us to consider those revenues when considering
what PILT was designed to do.
Now at the time PILT was enacted, at the time the program
was created by Congress it was understood that the total funds
received by most local governments under Federal lands to
revenue and fee sharing statutes in existence at that time
seldom approached the level of revenues that would be collected
by ad valorem taxes, you know, the property taxes were these
lands in private ownership. So judging from that language, from
that legislative history from the understanding that was in
place at the time PILT was created, the PILT program was, I
believe, intended to make up that difference. With the goal
being to make up for the lost revenues due to the presence of
Federal land and not simply the compensation--not simply to
provide compensation to counties for their out of pocket
expenditures in terms of their maintenance of infrastructure,
roads and other infrastructure on Federal land.
So if that's the case then shouldn't payments under the
PILT program be made at least to be roughly equivalent to what
those counties might be receiving in ad valorem property taxes?
Ms. Haze. So I appreciate your question.
I can only answer that the PILT act, the way that it's
constructed now, specifically defines per acre values and a
sliding population scale to be used for the payments. When
Congress enacted it in 1976 I've gone back and read some of the
history around the long debates over it. I mean there were a
lot of debates about the equivalency to local taxes and to the
tax base. It's not perfect by any stretch, but there was a lot
of angst and agonizing about how to establish rates for the
act.
Senator Lee. You can certainly sympathize with those taxing
jurisdictions and the plight that they incur because you
concede, I assume, that in most, nearly all instances, the
amount that they receive under PILT is a very small, small
fraction of what they might otherwise receive if they were able
to tax those lands, even if it was at the lowest rate, say the
green belt rate.
Ms. Haze. So I'll say I think the next panel has a couple
people who will be able to speak very clearly to the lack of
equity across and how the payments impact individual counties.
It varies because of the population factors. It varies because
of the acreage, clearly. Then one of the very big variables is
that the payments factor in a deduction for prior year revenue
payments.
So if there are large revenue payments then the PILT
payment goes down.
Senator Lee. Right.
Now the Federal Government is, by far, the largest land
owner in the United States. No one else comes close or even
comes close to coming close. The Federal Government owns about
30 percent of the land mass in the United States.
Most of that land is concentrated in the Western United
States. Most of that is concentrated in just a small handful of
States where the Federal Government owns a majority or in the
case of my State, a very substantial majority of the land.
Given the fact that most of that land is concentrated in just a
few Western States, when we're told over and over and over
again as Westerners that hey, everyone benefits from Federal
land ownership, don't you think there ought to be some offset?
If everyone in the United States benefits from Federal land
ownership than shouldn't those--isn't it a little bit unfair to
make those who reside in those few States pay for what everyone
else benefits from?
Ms. Haze. I think I'm not the expert to comment on the
fairness of it. Like I said, it's not perfect. It is the way
Congress constructed it.
I think those are the--those are clearly the debates you'll
be having in reauthorization.
Senator Lee. I understand Congress created it. I see my
time is expired. I'll just leave you with a parting thought.
Keep in mind as the Federal land manager of the largest
swath of Federal land in our country, as you manage that we're
already suffering because of the relative dearth of income that
we have as a result of that Federal land ownership. There are
things you can do to offset in some ways that absence of
revenue in the way you manage it and what you permit and what
you don't permit.
Thank you very much.
Thank you, Chairman.
The Chairman. Thank my colleague.
Let me tell the witnesses what's going to happen now. In
addition to forestry being so important to the Oregon economy,
international trade is as well, a real economic engine for our
State.
So Senator Cantwell is going to Chair the hearing for a bit
so I can go down and make the case for expanding the
opportunity to create more good paying jobs in trade. Then
we'll come back to forestry.
So, Senator Cantwell, you have not even had your first
round. If Senator Murkowski is agreeable you would now Chair
and ask any questions you may have. Then Senator Murkowski and
Senator Risch have not had a second round.
I appreciate the patience of both our colleagues and our
witnesses. We are lucky to have Senator Cantwell step in now. I
will return very shortly.
Senator Cantwell, thank you.
Senator Cantwell. [presiding] Thank you, Mr. Chairman.
Chairman, I was actually going to go to the next panel. So
I don't know if anybody has more questions for this panel.
So, yes, Senator Murkowski.
Senator Murkowski. Thank you.
I guess to the entire panel here. You've heard the
frustration clearly here. You all each have said that there is
support for reauthorization of Secure Rural Schools, support
for PILT and appreciation as to why the need, why the
necessity.
I guess the question for you is we've been talking about
some of the proposals that we have. I have suggested that if
you've got a Federal Government that's $16 and a half trillion
in debt and we need other ways to find this reliable, steady
funding stream that you've talked about, Chief. Let's look to
some.
The State of Alaska has come up with what I think is a
reasonable proposal in terms of State management. Others have,
I think Senator Barrasso was very clear in saying assign this,
turn the Federal lands over to the counties, to the States.
Look for other operations.
You've suggested that what we need to do is we need to
harvest more, but 16.8 billion board feet is what it would take
this year to match what is going out in Secure Rural Schools
funding. Probably not going to get there from here today.
So I guess the question to you is surely if you support
these programs you've noodled over what some of the options
might be and how we pay for it. How--what the Administration's
proposal is to pay for it? I guess an additional question would
be are we going to see a legislative proposal contained within
the budget when that comes out in the next month, I guess, or
so?
Can you tell me where your thought process is on what you
might do to better provide for Secure Rural Schools and PILT?
This is to you, Chief, Ms. Haze, Ms. Fennell? Go ahead.
Mr. Tidwell. Senator I understand the difficulty of finding
the finances. Senator Baucus, expressed that in his remarks
earlier. There are a lot of different ideas out there that
you've presented.
Senator Wyden has presented others. Mr. Barrasso. So
there's a lot of different ideas out there.
So we are committed to work with the committee to be able
to find ways to maybe move forward with some different ideas.
Senator Murkowski. Do any of those ideas rise to the top of
the stack? Are there any that you look at and say, that's a non
starter?
That would help us as a committee because we are looking
for that longer term solution. Again, I think Senator Baucus
doesn't want to be in the position of year after year trying to
figure out how we piece this together. How we rob Peter to pay
Paul, to use Senator Barrasso's expression here.
Surely there must be something that you think is better
than others?
Mr. Tidwell. You know I'd like to just get back to you on
that. I think we can probably identify some things from the
Administration's view that are probably non starters so as not
to spend time on some things like that. But I would like to
just take the opportunity to be able to get back with the
committee on some different ideas.
Senator Murkowski. Ms. Haze.
Ms. Haze. So I would--we're not at liberty to talk about
the 2014 budget. But we can talk about the 2013 budget which
included proposals to reauthorize both of these programs.
Within the budget there were a number of offsetting ideas,
revenue collecting ideas, some more challenging than others.
So we could offer to go back and look at some of those and
as the Chief suggested come back and have some more
conversations.
Senator Murkowski. Ms. Fennell, you want to jump in?
Ms. Fennell. Thank you, Senator.
We have not looked at the various options that are being
proposed. Our work has principally looked most recently at the
implementation and oversight of Title III of the Secure Rural
School Act. So my comments are more specifically aligned with
that.
One lesson that I would take away from the work that we did
is the importance of clarifying authorized uses for various
funds, to limit confusion that exists amongst counties given
how the counties are very tightly constrained with their
current budgets. I would suggest that in terms of any changes
to the law itself it would be important to consider clarity of
terms to ensure that the authorized uses are clear to the
counties that need to implement it.
Senator Murkowski. I think where we will probably go from
here, what I certainly will suggest to the Chairman is that we
do have a sit down with you, Chief, with folks over Department
of Interior. I think there is a real effort to try to figure
out a longer term solution and how we might construct that is
going to require an effort that is collaborative. In order for
us to make this work it's going to have to work from, not only
a bipartisan basis, but we've got to get folks on the West or
on the East to understand why we have to do this in the West. I
think the Administration needs to be part of these discussions
as well.
But I, for one, am weary, just weary of having to go back
to constituents at home again who are looking at their
communities and recognizing that from year to year they don't
really know what's going to happen to them. Then you throw in
just the calamity of sequester and declining budgets and then a
lack of any clear, identifiable path on this. It's not right.
It's not fair.
So we've got a lot more work to do. Maybe when we're
sitting together quietly we can come up with some good ideas.
So thank you for being here today.
Thank you, Madame Chair.
Senator Cantwell. Thank you.
Senator Risch.
Senator Risch. Madame Chairman, thank you. It's twenty to
noon and we got another panel to hear. So I'm going to yield my
time back.
Senator Cantwell. Thank you, Senator Risch.
Let's call up--thank you all for being here to testify. I'm
sure we'll have some follow up questions for you.
Senator Cantwell. But let's move to the second panel that
we have.
I'd like to welcome them to the table.
Paul Pearce, who is the President of the National Forest
Counties and Schools Coalition.
Mr. Ryan Yates, the National Association of Counties.
Mr. Mark Haggerty, Headwaters Economics.
Professor Jay O'Laughlin from the University of Idaho
College of Natural Resources.
I thank you all for coming today. I wanted to particularly
thank you for your continued leadership on the County Payments
program that includes the Secure Rural Schools and Payment in
Lieu of Taxes. As you know these programs are critically
important to the Pacific Northwest and across our country.
I want to thank Paul Pearce for traveling across the
country to testify today. He's been a long time partner on the
County Payments program. I certainly have called on him many
times.
His home of Skamania County in Southwest Washington
exemplifies the needs for these payments. Almost 80 percent of
Skamania County is in the Gifford Pinchot National Forest
making it non-taxable by the county. Other large portions of
land are also owned by State and timber companies. In total
about 2 percent of the county remains eligible to be taxed a
full value.
Now someone might say why do you, you know, why do you care
if so much is already in timber land? Skamania County is also a
gateway across our State in the Columbia Gorge. It's a source
of major technology companies that are locating there as well
as a huge tourism attraction. So Skamania County does need to
operate. It does need revenue to operate.
So the National Forests are key features across our State.
Within 5 national forests and the Mount St. Helens volcanic
monument, the Forest Service manages nearly 9.3 million acres
or 21.7 percent of our entire State. Because over a fifth of
the State is excluded from the tax base as a Forest Service
land, it becomes clear that the county payments are not only
essential to counties, but also an obligation of the Federal
Government.
The Federal Government's obligation extends beyond just the
loss of tax base due to non-taxable Federal lands. These lands
are also impose real cost on the counties. They include
maintenance of roads, providing access, planning and managing
forest fires and providing emergency services such as search
and rescue operations. The Federal Government is obligation to
compensate all these costs that many of our rural communities
could not otherwise afford. The Federal Government also has the
obligation to provide transitional assistance to these
counties.
So when abrupt changes to these programs have occurred I
think our committee has worked in the past to extent and reform
the county payments. I hope that we will make more direct
connections between the obligations that the Federal Government
has. How these payments are calculated and distributed.
I believe that the formula must be simpler and more
transparent. That it also should link directly to the all
Federal Government obligations. That means that each and every
variable in the formula needs to have a direct link. These
payments are too important to put to jeopardy or gainsmanship
here in the Federal arena.
The County Payment program has proven effective and
responsive and it is essential to our nation. Without this
vital revenue counties in Washington State would lose more than
$35 million in irreplaceable funds that are so critical for
these programs that I just mentioned.
So I look forward to having all of you have your testimony
in the record. I hope that we'll give all our colleagues in
Congress a clear understanding of these issues.
Senator Murkowski, I didn't know if you wanted to make any
further statements before this panel?
If not, let's just go to the panel. We'll start with you,
Mr. Pearce and we'll go right down the line.
STATEMENT OF PAUL J. PEARCE, PRESIDENT, NATIONAL FOREST
COUNTIES AND SCHOOLS COALITION, STEVENSON, WA
Mr. Pearce. Thank you very much, Senator Cantwell. It's
very nice to see you again, especially in my new role.
Obviously Senator Murkowski and members of the committee,
thank you very much for this opportunity to testify.
Counties and schools in 41 States and Puerto Rico wish to
thank you for your leadership. We also want to thank Senator
Wyden specifically for his co-sponsorship of SRS, wherein he
recognized the damage being done to forest dependent
communities and has worked tirelessly on their behalf.
I thank Senator Cantwell for her hard work on this. I
remember several floor speeches that--where I sat and listened
to someone really fight hard for counties. Thank you very much
for that.
Senator Murkowski for your work on forest health, second to
none.
We want to thank Senator Murray for her unending support of
counties and schools including the Chairman's mark this last
week in the Senate budget for SRS and PILT.
Congress passed the 1908 act, the 25 percent act which
created a contract with the counties for revenue sharing. It
was the first in the Nation.
The Weeks Act of 1911 became the legislation for creating
Eastern and Southern national forests including them in this
same contract. The contract worked well into the late 18--or
1980s when court decisions endangered species listings and
agency priorities and a general change in the priorities of the
Nation dramatically reduced extraction activities on public
lands including timber.
In 1992 Congress created owl guarantee moneys for those
communities hardest hit by the spotted owl listing.
In 2000 Congress passed the Secure Rural Schools Act which
authorized payments through 2006.
In 2007 it's been reauthorized 3 times up to this last
year, 2012. We thank you very much for that.
SRS Title I payments are direct payments to counties and
schools. A handful of counties they're used for county roads
and schools. A handful of counties can use these funds to
support libraries, public health, law enforcement and other
services besides roads.
Dr. Eyler's report which is attached, shows that a loss of
SRS payments will result in a loss of $1.3 billion in sales,
$178 million in realized tax revenue at the local, State and
Federal level, over 10,000 jobs, these would include 3,000
education jobs and 1,400 jobs in counties and county road
departments.
My own county, Skamania County, is a county of 11,500
people. I was a commissioner there until this last--until just
the beginning of this year. The last 2 years of actual 25
percent payments we made over $7 million per year. SRS in 2006
was approximately $6 million. This past year our, the payment
to the county, was $1.8 million. If we were to lose this
funding 2 of the 4 school districts in the county will in fact
close.
SRS Title II are moneys used for forest projects utilizing
the Resource Advisory Committees, or the RACs. The amount of
these funds are determined by county commissioners in each
forest county between 8 and 20 percent of their counties share
the State's payments. This has been a highly successful
program.
We've heard earlier talk about the collaboration. These
collaboratives actually work. In Sitka, Alaska RAC funds the
science mentor program partnering high school students with
Forest Service Fish and Game and the University of Alaska to
collect and analyze data on the Tongass National Forest.
In Louisiana on the Kisatchie National Forest RAC funds
have been used to leverage other funds securing completion of
road repair, environmental mitigation, safety challenges.
In Oregon the Medford RAC restored a 3 mile section of
Spencer Creek near Keno in order to revive the creek's natural
habitat and increase the population of native species.
So this is actual work being done on the forest using these
funds and the RACs.
Title III funds are reimbursement for emergency services,
community wildfire planning and fire wise implementation.
Examples of 2 searches this last year include a hiker, who
fell into the Mount St. Helens crater, eventually costing
local, State and Federal agencies over $150,000.
The second involved a 2-week search for a young woman lost
in the Columbia River gorge costing local, State and Federal
agencies $550,000.
These are 2 examples in one forested area. Without Title
III the counties could not absorb these costs.
In closing, reference to SRS reauthorizing we would
respectfully request that new language state, ``All counties
opting to receive a portion of the State payment will receive
an amount equal to their Fiscal Year 2010 payment which was
received in January 2011.'' Further, we agree with the
Chairman, who said recently, a short term extension of SRS is
not a long term solution for these communities. We in fact
pledge to work to enact legislation that provides bridge
funding to forested counties and school districts and believe
that long term economic vitality must include active,
sustainable forest management to achieve resilient forest
lands.
Thank you very much for your time. I'll answer whatever
questions you might have.
[The prepared statement of Mr. Pearce follows:]
Prepared Statement of Paul J. Pearce, President National Forest
Counties and Schools Coalition, Stevenson, WA
Chairman Wyden, Ranking Member Murkowski, members of the committee
and guests. Thank you for the opportunity to appear before you today on
this topic of intense interest and concern to the National Forest
Counties and Schools.
Before I begin and on behalf of Counties and Schools, from Alaska
to Texas . . . Washington to Florida . . . in 41 states and Puerto
Rico, I wish to thank Senator Wyden for his continued leadership. As
the original co-sponsor of the Secure Rural Schools legislation he
recognized the damage being done to these forest dependent communities
and has tirelessly continued these efforts through a multitude of
reauthorization successes.
I additionally wish to thank Senator Murkowski for her hard work
over the years on SRS and forest health issues.
And we wish to thank Senator Murray, Budget Committee Chair, who
has always supported Counties and Schools, including as a Chairman's
mark both SRS and PILT as deficit neutral programs in the current
Senate budget.
Seven hundred twenty nine (729) or 24 percent, of the nation's
three thousand sixty nine (3069) counties contain national forests,
some equaling up to 90 percent of their land mass. The 154 National
Forests cover an area of 193 million acres across this country. These
counties are responsible for the infrastructure including roads,
schools, and emergency services that allow those forests to be used,
and gateway communities to survive. Thereby fulfilling the promise of
Gifford Pinchot; ``that no community would suffer for housing National
Forests'''.
In 1891 the Congress created Forest Reserve authority through the
General Revision Act. By 1905 those reserves had grown to more than 80
million acres. President Roosevelt remade the U.S. Bureau of Forestry
into the USDA Forest Service with Gifford Pinchot as the first chief
forester. That began a three year process which resulted in Congress
transferring all forest reserves to the new Forest Service.
The 1908 Act also concluded the conversation between the Counties
containing these forests, Congress and the Administration. The contract
was for revenue sharing, the first in the nation, of a share of all
revenues generated on these lands. This clearly made sense at the time
as the growing nation extracted renewable resources for the good of
all.
The Weeks act was signed into law on March 1st, 1911 becoming the
mechanism for the creation of our Eastern and Southern National
forests, including them in the contract for revenue sharing. The
contract worked well for nearly a century, into the late 1980's, when
court decisions, endangered species listings, such as the spotted owl,
agency priorities and a general change in the priorities of the nation
dramatically reduced extraction activities on public lands including
timber.
In 1992 Congress created Owl Guarantee monies for those counties
hardest hit by the northern spotted owl endangered species listing.
In 2000 Congress passed the Secure Rural School and Communities
Self Determination Act which authorized payments through 2006. These
payments were a life saver for our forest counties. In 2007 Congress
reauthorized the act for one year and then in 2008 reauthorized it for
an additional four years through 2011. This reauthorization could not
have come at a more appropriate time and clearly recognized the ongoing
contract between these forest Counties and the Federal government--and
what a tremendous success it has been.
And as you all aware Congress reauthorized the program for an
additional year in 2012.
The Act has three Titles, each of which carries clearly defined
responsibilities.
TITLE I
These are direct payments for county roads and schools. In a
handful of counties these funds are available as general fund dollars
supporting among other services libraries, public health and law
enforcement. Each state determines the division of these funds between
Counties and Schools based on the original 1908 revenue sharing law.
This money equates almost exclusively in these communities to jobs;
county road department and school employees. Without this symbiotic
relationship our children would not be able to get to school, often
over large distances, nor in many cases would they necessarily have
schools to attend or teachers to instruct them within their own
communities.
These gateway communities to our national forests would simply not
exist without this infrastructure. These County roads are how the vast
population that recreates on these millions of acres travel to and from
them. In fact, many roads inside the National Forests are owned or
maintained by Counties.
Also, we need to explore the impact SRS has on rural road
maintenance and the far-reaching impacts to health and safety issues.
According to the Fatality Analysis Reporting System (FARS), every year
nearly 25,000 people die in rural road crashes (accounting for 58
percent of total road fatalities) across this nation. Traffic crashes
are assessed to be the one of the nation's most costly health problems.
The fatalities and injuries associated with rural auto accidents
come as no surprise to those of us who represent rural communities. The
Department of Transportation documents, ``8.4 million lane-miles of
roads in the United States, with over 6 million of these rural.'' Rural
areas face numerous unique highway safety challenges. Crashes usually
occur at higher speeds than accidents in urban areas, and due to remote
locations, it often takes longer for emergency assistance to arrive at
the scene.
Any abandonment of maintenance of rural roads will compound
existing infrastructure problems and greatly contribute to future
economic, health and social problems including an increased level in
rural road fatalities.
According to Dr. Eyler, Economic Forensics and Analytics, (report
attached) the loss of Secure Rural Schools and Community Self-
Determination Act payments, averaged over the FY 2008 to FY 2021
period, $1.296 billion in sales revenues, government at all levels
losing over $178 million in tax receipts, and over 10,400 people losing
their job. These job losses include over 3000 jobs in education and
over 1400 in County Roads.
Loss of one family wage job in these rural communities often
results in the entire family having to leave the community to find
work. This results in the spouse quitting their job, children being
withdrawn from school, lowering enrollment causing even greater
economic hardship and job loss.
According to the Sierra Institute report (attached) on the 20 year
cumulative impacts to the Counties of Washington, Oregon and California
impacted by Northern spotted Owl critical habitat there are far
reaching impacts to these communities;
Case studies, two in California and three each in Oregon and
Washington were conducted to better understand socioeconomic changes
and current socioeconomic conditions ``on the ground.'' Some key
findings from these cases include in California:
Siskiyou County lost all its saw mills, has seen its
population age, and has lost eight schools, challenging the
county to provide for the remaining students and reverse the
loss of young families.
In Humboldt County there are powerfully suggestive
relationships between mill closures and student impoverishment
as reflected in Free and Reduced Price Meal (FRPM) enrollment
rates. This county has suffered dramatic declines in its goods-
producing sector, with the manufacturing subsector losing 65
percent of its 1990 jobs by 2011.
In Oregon
Tillamook County has 24 percent of its children living in
poverty, and 39 percent living in single- parent households,
almost double the national average.
Douglas County has 31 percent of its children living in
poverty--twice the national average and 34 percent in single-
parent households.
In both of these counties, but especially in Douglas County,
there are significant declines in manufacturing jobs,
particularly since 2008. Free and Reduced Priced Meals
participation rates increased over the last four years as well,
some schools by almost 20 percent.
Josephine County, over the last several decades saw forestry
and logging jobs decline by 80 percent. Wages have stagnated
and are two-thirds of the Oregon average. The county now ranks
near the bottom of Oregon counties in health indicators and
FRPM participation rate for the county is 70 percent.
In Washington
Grays Harbor County Natural Resources and Mining jobs
declined by over 50 percent and Forestry and logging jobs by
just under 70 percent from 1990 to 2010. The county is near the
bottom of the health rankings for counties in the state. FRPM
participation rates for the county exceed 60 percent, with one
school district at 92 percent in 2011 and another at 88
percent; the lowest rate is 41 percent, reflecting the
considerable differences across the county.
Skamania County has 90 percent of its land in federal
ownership, and 59 percent of the land in the county is
designated as critical habitat area. Natural resource and
manufacturing jobs have declined by over 50 percent over the
last 20 years.
Secure Rural School and Community Self- Determination Act (SRS)
payments to replace lost timber receipts to counties and schools have
been historically important. In California, on average, Humboldt County
Schools received just under 5 percent of their funding through SRS;
Siskiyou received on average just under 7 percent; and Trinity County
received 15 percent. In Oregon, U.S. Forest Service SRS funding has
provided on average 23 percent of county road budgets, with six
counties receiving over 40 percentof their total road budget. Though
dramatically lower in 2011, SRS payments comprised 40 percent or more
of Skamania County general fund throughout the 2000s. In Oregon ., the
Bureau of Land Management contribution to county budgets has been
significant. In Douglas County in 2009 it comprised 17 percent of total
county revenues and in Jackson County; it makes up 7 percent of total
county revenues.
We wish to thank Congress for having continued these payments in
lieu of revenue sharing which have resulted in ositive economic benefit
to our communities and schools. Without them the economic damage would
clearly be significantly worse.
TITLE II
These are monies specifically to be used for projects on or of
benefit to the forest itself utilizing one of the greatest successes of
this entire act, the Resource Advisory Committees, or as they are known
RAC's.
Membership on the 15-member RAC is balanced to reflect the array of
interests and users of Public Lands:
Five members represent commodity interests such as grazing
permittees, commercial timber, energy and mining, developed
recreation and/or off-highway vehicle groups, and
transportation & rights-of-way.
Five members represent conservation interests such as
environmental organizations, historic & cultural interests,
conservation, and dispersed recreation.
Five members represent community interests such as elected
officials, Indian Tribes, State resource agencies, academicians
involved in natural sciences, and the public-at-large.
For a project to be approved it must have a majority of votes from
each of the five member groups. RAC's are the most successful
nationwide collaborative effort today within the forest system. Well
over 6000 projects have been implemented on the forests without a
single appeal. These projects occur in the Southern, Lake,
Intermountain West, and Western states. Many of the RAC's actually meet
to collaborate successfully on projects outside of the use of Title II
monies.
In Alaska, Sitka is a small rural community that is completely
surrounded by the Tongass National Forest. One of the RAC projects is
the Science Mentor Program. This program partners high school students
with land and resource managers from the US Forest Service, State of
Alaska Department of Fish and Game, and University of Alaska
Researchers, to help collect and analyze important research and
monitoring data on natural resources in the lands and waters of the
Tongass National Forest. Outputs of this project produce publishable
scientific research materials that also serve to help guide management
activities. Additionally, the project gives students scientific
research experience and prepares them for University pursuits and
future careers as land managers and scientists. The project has already
inspired several young women to pursue science careers. In addition to
the benefits to future leaders, the projects gives resource managers an
opportunity to engage the larger public on the research and management
topics that they are working on and educate the larger public on public
lands and natural resource management issues.
In SW Idaho a project the RAC funding assisted with concerned
access to private property and public land which required fording a
sensitive stream where endangered Salmon spawned. This project was too
costly for individual agencies to fund. Using the RAC process and Title
II funding the project brought together the County, Forest Service, the
Nez Perce Tribe and local landowners to pool all their resources to
build a bridge to eliminate the impacts to the Salmon habitat and
provided the needed access to the private property and the public lands
beyond.
In Socorro County, New Mexico they were able to improve drainage
and chip seal Hop Canyon Road in the Magdalena area (all the way to the
Fire Station). They used the $226K in Title II funds for materials and
provided all equipment and labor through the County so they could
complete more of the road. Without these improvements, the road would
have continued to wash out (they have a FEMA disaster claim on this
road due to flooding), essentially cutting off residents. For the next
project, they will use the $51K in available Title II money to repair
and reseal Water Canyon Road. This is so important; they even
negotiated an MOU with New Mexico Tech to pay for some of the materials
as the road leads to the MRO observatory and is a high-use campground
In Washington on the Gifford Pinchot there is the Forest Youth
Success program which was funded from Title III under the 2000 Act and
is now funded through Title II. As collaboration between the County,
Schools and Forest Service this program puts up to 40 high school age
kids to work on crews in the forest on restoration projects throughout
the summer. Recently Washington State University conducted a survey of
the past participants of the program and found some very interesting
initial data. Some of the reported outcomes:
100 percent said FYS increased their life skills such as
team work and leadership.
97 percent said they learned important workplace skills such
as punctuality and responsibility.
92 percent said they increased their use of financial
resources.
69 percent said FYS influenced the shaping of their career
choices.
47 percent said FYS shaped their college degree goals.
In Louisiana, on the Kisatchie National Forest, RAC monies have
been used to leverage local funds and secure completion of road repair,
environmental issues, and safety challenges. Monies have been used to
protect endangered species, protect water quality, hard surface roads,
and provide safe access to public recreational areas. Support from the
public and private sectors have contributed greatly to the efficient
and judicious use of federal monies.
In Oregon the Medford RAC approved funding that restored a three-
mile section of Spencer Creek near Keno, Oregon. Over 50 log
structures, created from 220 cull logs salvaged from local timber
sales, were placed in the creek to reestablish its original character.
Additionally, the project plans to restore the creek's natural habitat
and increase the population and distribution of native fish and
amphibians, including the Klamath River redband trout, Klamath small-
scale sucker, lamprey, and Pacific giant salamander.
TITLE III
Referred to as County Funds, in the original act the purpose of
these funds included emergency services on the forest, fire planning,
community service work camps, easement purchases, forest related after
school programs and planning efforts to reduce or mitigate the impact
of development on adjacent Federal lands.
The 2008 reauthorization removed all categories except emergency
services and community wildfire planning and implementation.
In terms of search and rescue I will cover just two examples. On
the 1.2 million acre Gifford Pinchot National Forest which includes the
Mt St Helens National Monument and the 80,000 acres of the Columbia
Gorge Scenic Area. In this area, close to the Portland metropolitan
area, search and rescue events are frequent. The volunteer searchers
are not reimbursed except for their mileage. Yet the average search
costs are in the several thousand dollar range for those searches
lasting just a few days and not requiring aircraft. That being said, in
2011 alone the following searches resulted in the hundreds of thousands
of dollars.
The first was a hiker who fell into the Mount St Helens crater. The
total local, state and federal cost reached over $150,000.
The second involved a two week search for a young woman who was
lost in the Columbia River Gorge. This incident eventually cost local,
state and federal taxpayers $550,000.
Sadly, both cases ended up being recoveries rather than rescues.
Without Title III and assistance from both state and federal resources
our counties could not afford these costs. Multiply these examples
across the US Forest Service system and you begin to understand the
immensity of cost associated with these activities which fall to the
Counties to manage.
CLOSING RECOMMENDATIONS
On reauthorization of the act we respectfully suggest that new
language simply state; All counties opting to receive a portion of the
state payment will receive an amount equal to their Fiscal Year 2010
payment, which was received in January 2011. This would return the
program to a more equitable basis for all Counties and Schools, with a
minimal additional cost and would replace the current formula which is
cumbersome and impossible for a lay person to interpret.
As an example Skamania County, my home, in Washington received our
last 25 percent payment in 1992 of $7 million dollars each to the
County and the Schools. Our SRS payment in 2006 was a little less than
$6 million each. Our 2012 payment just received was $1.8 million each.
The 2010 SRS payment was $3.8 million, a substantial reduction in its
own right.
Further, we agree with the Chairman who said in a recent article
``A short-term extension [of SRS] is not a long-term solution for these
communities. We've got to get our people back to work in the woods, for
example. We have got to increase the number of jobs in resource-
dependent communities where there's federal lands and federal water. We
believe that can be done consistent with protecting our environmental
values.''
Our mission statement* and Principles for Legislation (attached)
echoes that sentiment; Long term economic vitality must include
legislation requiring active sustainable forest management to achieve
resilient forest lands managed by the US Forest Service and . the
Bureau of Land Management.
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* The mission statement and Principles for Legislation has been
retained in committee file.
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Additionally, on the issue of reauthorization of Stewardship
Contracting we feel it is extremely important that a conversation occur
between Congress and the Counties as to its impact on the revenue
sharing contract between us before it is permanently reauthorized.
Thank you once again for the opportunity to speak about the success
of the Secure Rural Schools and Community Self-Determination Act.
Senator Cantwell. Thank you, Mr. Pearce.
Mr. Yates, thank you for being here.
STATEMENT OF RYAN R. YATES, ASSOCIATE LEGISLATIVE DIRECTOR,
LEGISLATIVE AFFAIRS DEPARTMENT, NATIONAL ASSOCIATION OF
COUNTIES
Mr. Yates. Thank you, Senator Cantwell, Ranking Member
Murkowski and members of the committee.
Thank you for the opportunity to testify on behalf of the
Nation's 3,069 counties, parishes, boroughs to provide insight
on the Payment in Lieu of Taxes program. For more than 30 years
the PILT program has provided payments to counties and other
local governments to offset losses in tax revenues due the
presence of substantial acreage of Federal land within their
jurisdictions. Since local governments are unable to tax the
property values or products derived from Federal lands these
payments are essential to support local government services.
Congress passed the Payment in Lieu of Taxes act in 1976.
The impetus for its passage was the passage of FLPMA which
specifically established the disposal of public lands would
largely cease. In lieu of a future in which lands could
continue to pass from Federal ownership to private ownership,
Congress opted to reimburse local governments for land that
would remain in Federal Government in lieu of paying direct
property taxes.
Historically payments were limited to an amount
appropriated by Congress. Initially authorized at $100 million,
that amount was appropriated annually during the first decade
of the act. Following strong pressure from NACO and counties
the act was amended in 1994 to provide for a more equitable
authorization level in light of the disparities that existed
between property values and current PILT payments. The law, as
amended, using the Consumer Price Index to adjust the
population limitation and the per dollar acre amounts used to
calculate payments.
From 1994 to 2007 the authorized level and the appropriated
level began to diverge. Since the authorization crept up that
amount equal to the CPI each year while the appropriations
stayed roughly constant.
In 2008 Congress enacted the Emergency Economic
Stabilization Act of 2008 which authorized counties to receive
their full PILT entitlement for Fiscal Years 2008 through
Fiscal Year 2012. All mandatory funding minus a 5.1 percent
sequestration cut will be available for counties through the
enactment of MAP21 last year which provided 1 year of an
additional mandatory funding for Fiscal Year 2013.
Last week Senate Budget Committee Chairwoman Patty Murray
made continued funding of the PILT program and the
reauthorization of SRS a priority in a proposed Committee
Budget for Fiscal Year 2014. The proposed budget resolution
included a deficit neutral reserve fund for rural counties and
schools to provide for the reauthorization of SRS and/or
changes to PILT. They could believe several policy
modifications could be explored by Congress to identify ways to
make payments to counties more equitable, a range of possible
alternatives could be considered to more evenly distribute PILT
funds to counties to provide greater budget certainty.
Over time some programmatic anomalies have become evident.
Among these are the non inclusion of Federal acquisitions,
substantially reduced payments to jurisdictions with large
Federal estates and the inability of current formulas to
account for externally induced costs resulting from Federal
land use by persons originating from outside of the county.
First, the use of population caps may not be the most
appropriate method for providing fair allocation. Depending on
the current county population the PILT payments are capped at
predetermined levels. The use of population caps fails to
accurately demonstrate the actual population of people being
serviced by the county.
For example, counties with large acreages of Federal land
and small populations are often gateway communities to
recreation areas in the national forest and national park
system. County governments are required by law to provide
services to people regardless of their place of residence.
An additional formula inequity has occurred due to the
formulas used in prior year payments. Revenue sharing payments
identified as prior year payments provide funding to county
governments such as the Mineral Leasing act and Secure Rural
Schools payments. However payments from these programs reduce
the amount of PILT funding to many resource dependent counties.
The Federal Government should not reduce its tax obligation to
local governments solely because other land management revenue
agreements between--because of land management revenue
agreements between governments.
PILT is not only an important element to county funding,
the fact that it is indexed to inflation and is paid to
counties for general purposes is critically important to
retaining its character as a property tax payment. NACO
believes this formula should retain its basic character.
Some have suggested the consolidation of PILT with revenue
sharing programs such as SRS. Comparing SRS and PILT is like
comparing apples and oranges.
The first being a revenue sharing program based on resource
extraction, the latter being based on Federal land ownership
and loss of property taxes to local governments. Any
consolidation of these 2 or other would be disastrous to
Federal land counties and ultimately politicize and otherwise
apolitical and straight forward Federal program. While Congress
make seek to fund both SRS and PILT on the same legislative
vehicle, we would oppose any effort to consolidate PILT with
natural resource based revenue sharing programs.
NACO appreciates the opportunity to provide testimony
before the committee. I look forward to working with members of
the committee and staff to develop and pass legislation that
will continue the historic partnership between Federal and
county governments by extending continued mandatory funding for
the Payment in Lieu of Taxes for Fiscal Year 2014 and beyond.
This concludes my testimony. Be happy to answer any
questions. Thank you.
[The prepared statement of Mr. Yates follows:]
Prepared Statement of Ryan R. Yates, Associate Legislative Director,
Legislative Affairs Department National Association of Counties
Chairman Wyden, Ranking Member Murkowski, and members of the
committee. Thank you for the opportunity to testify on behalf of the
Nation's 3,069 counties, to provide insight on the Payment in Lieu of
Taxes (PILT) program.
For more than 30 years, the PILT program has provided payments to
counties and other local governments to offset losses in tax revenues
due to the presence of substantial acreage of federal land in their
jurisdictions. Since local governments are unable to tax the property
values or products derived from federal lands, these payments are
essential to support essential government services (mandated by law)
such as education, first responders, transportation infrastructure, law
enforcement and healthcare in nearly 2,000 counties in 49 states, the
District of Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands.
This testimony will provide a historical overview of the PILT
program, provide context to programmatic changes that (if enacted by
Congress) could lead to a more equitable distribution of PILT funds,
and lastly address the current funding situation and requirements for
future payments.
HISTORY
In 1954, elected county officials from several western states
joined together to develop a regional coalition of counties called the
Interstate Association of Public Land Counties-an organization that
would ultimately evolve into the Western Interstate Region of the
National Association of Counties. The primary purpose of the
organization was to educate policy makers in Washington, DC and
advocate for Federal payments to counties in lieu of lost property tax
revenue due to the presence of the vast Federal estate.
The organization grew and incorporated membership from counties in
the fifteen western states and enlisted support from other public land
counties in other regions of the United States through what was then
the National Association of County Officials. After several years of
growing pressure from county officials nationwide, the 94th Congress
passed the Payment in Lieu of Taxes Act (PL 94-565). The PILT Act was
codified in Chapter 69 of Title 31 of the United State Code. Applicable
regulations are in Subpart 1881, Title 43 of the Code of Federal
Regulations.
The impetus for its passage in 1976 was the passage of the Federal
Land Policy and Management Act (FLPMA), which specifically established
that disposal of public lands would largely cease. In lieu of a future
in which lands could continue to pass from Federal ownership to private
ownership (as provided through the Homestead Act), Congress opted to
reimburse local governments for land that would remain in Federal
ownership ``in lieu'' of paying direct property taxes.
Congress established national formulas which took into account
population, existing revenue-sharing payments for resources harvested
or extracted from public lands, and base acreage of the Federal estate
within the jurisdiction. With a few exceptions in New England and
Wisconsin, states determined that counties were the jurisdictions that
would receive payments.
Local governments (usually counties) which provide services such as
public safety, infrastructure, housing, social services and
transportation and have non taxed federal land within their
jurisdiction, are eligible for annual payments.
Payments are made directly to the counties unless the state
government concerned chooses to receive the payments and, in turn, pass
the money on to other smaller governmental units such as a township or
city. (Wisconsin is the only state currently employing this option)
Historically, payments were limited to an amount appropriated by
Congress. Initially authorized at $100,000,000, that amount was
appropriated annually during the first decade of the Act. During the
1980s there were attempts to zero out the amount in budgets, but
Congress consistently restored the funds to the authorized level, such
that the minimum amount was available each year.
Following strong pressure from NACo and public lands counties
nationwide, the Act was amended in 1994 to provide for a more equitable
authorization level in light of disparities that existed between
property values and current PILT payments. The law as amended, uses the
consumer price index (CPI) to adjust the population limitation and the
per acre dollar amounts used to calculate alternative ``A'' and ``B''
under Section 6902. However, an individual county's payment from one
year to the next may not necessarily increase since the total amount of
money available under the PILT program is set by Congress each year in
the Department of the Interior and Related Agencies Appropriations
Bill. Payments also vary with changes in ``prior year'' payments.
From 1994 on, the authorized level and the appropriated level began
to diverge, since the authorization crept up by an amount equal to the
CPI each year, while appropriations stayed almost constant. Initial
payments were set at $0.75/acre (Alternative A) and $0.10/acre
(Alternative B).
While most enabling acts set an authorized funding level, PILT is
one of the few Federal programs which have no defined expiration and a
``floating'' authorization-in which the authorized level flows directly
from a summation of each county's indexed maximum payment level. Since
the 1994 Act indexed individual payments, authorization levels have
grown annually from roughly $100 million to over $393 million (FY2012).
The table below shows the national levels of authorization and
appropriation since 1981. There was a large increase in FY 2001, and
steady increases until FY 2006. In FY 2008, the U.S. Department of the
Interior (DOI) submitted two payments-the first payment in June was
fixed at the FY 2007 level by Continuing Resolution (P.L. 110-5), less
a 1.6 percent rescission. The second payment was paid following the
signing of P.L. 110-343-which modified the PILT program from a
discretionary program (subject to annual appropriations) to a fully
funded mandatory entitlement program. PILT was fully funded from FY
2008 to FY 2012.
HOW ARE PAYMENTS CALCULATED
Payments under each section of the Act are calculated as follows:
Section 6902 payments
Alternative A
$2.47 (in fiscal year 2012) times the number of acres of qualified
federal land in the county, reduced by the amount of funds received by
the county in the prior fiscal year under certain other federal
programs.
($2.47 X [number of acres of qualified federal land])-[prior
year funds received]
or
Alternative B
Thirty four cents (in fiscal year 2012) times the number of acres
of qualified federal land in the county, with no deduction for prior
year payments.
$0.34 x [number of qualified acres]
Payments under either alternative are subject to population payment
limitations.
Section 6904 and 6905 payments--
Payments on Federal lands acquired after December 30, 1970 as
additions to lands in the National Park System or National Forest
Wilderness Areas (Section 6904) and payments on Federal lands in the
Redwood National Park or lands acquired in the Lake Tahoe Basin near
Lake Tahoe under the Act of December 23, 1980 (Section 6905) are
computed by taking one percent of the fair market value of the
purchased land and comparing the results to the amount of property
taxes paid on the land in the year prior to federal acquisition. The
payment to the county is the lesser of the two.
Section 6904 Payments are made for a period of five years following
each acquisition.
Section 6905 Payments are made each year from the date the land was
purchased by the federal government until an amount equal to 5 percent
of the fair market value at the time of acquisition is fully paid.
However, the yearly payment may not exceed the lesser of one percent of
the fair market value or the property taxes assessed prior to federal
acquisition.
DEFINITIONS
Federal entitlement acreage
All Federally held lands in all States, Commonwealths and
Territories are counted with the exception of those lands that are part
of Department of Defense installations and withdrawals. Nationally the
following lands are counted:
a. All land administered by the United States Forest Service
b. All land administered by the National Park Service
c. All land administered by the Bureau of Land Management
d. All land withdrawn from public lands administered as part
of the National Wildlife Refuge System (acquired land is not
included)
e. All dredge and flood control land administered by the
Corps of Engineers
f. Project lands withdrawn and administered by the Bureau of
Reclamation
g. Lands in Colorado acquired after Dec. 31, 1981 to expand
Ft. Carson
h. Land on which are located semi-active or inactive Army
installations for ``use for mobilization and for reserve
component training''
i. Land in Utah acquired for the inter-basin water transfer
(URC land) project
Prior Year Payments
Prior year payments are payments to local governments under
programs other than PILT during the previous fiscal year. These
payments include those made under:
a. the Refuge Revenue Sharing Fund,
b. the National Forest Fund (``25% Fund'')
c. the Taylor Grazing Act,
d. the Mineral Leasing Act for acquired lands,
e. the Federal Power Act,
f. Titles I and III of the Secure Rural Schools and Community
Self-Determination Act.
The PILT Act requires each state to report these payments to the
U.S. Department of the Interior each year.
DISBURSEMENTS
In 2010, DOI announced a decision to delay the annual PILT
payments. This decision caused widespread panic and confusion for
counties nationwide as local governments have historically received
annual PILT payments in June of each year and plan their budgets
accordingly. The DOI last minute decision to delay payments without
providing any notice was problematic, and placed countless public lands
counties in difficult financial hardship.
Many counties begin their fiscal year July 1 and rely on the June
PILT payment to be available as net working capital available to the
county general fund. For example, in the state of Oregon, property
taxes are primarily received in November. The PILT payment being
received in June allows for adequate operating funds to provide
services to the community until the tax revenue flows again. In
counties that are heavily encumbered by Federal lands, the PILT payment
represents a sizeable percentage of the counties' beginning cash
balance.
Another problem created by the DOI decision to delay payments has
to do with violating individual state budget laws. In a number of
states, counties operate on a cash basis, which requires posting of
revenue once it is received. In counties whose fiscal year ends June
30, without the PILT payment, those counties could be in violation of
state budget law.
NACo and a bipartisan list of United States Senators and members of
the House of Representatives requested that Interior Secretary Salazar
take every effort to disburse payments to counties prior to June 30,
2010 in order to avert substantial financial distress in public lands
counties across the nation.
Ultimately, the DOI resolved the problem in time and released the
payments in late June, 2010. In light of the payment disbursement
conflict, Senators John Ensign (R-NV), Tom Udall (D-NM), and Mark
Begich (D-AK) introduced Payment in Lieu of Taxes Amendments Act of
2010 (S. 3730). The legislation would require DOI to issue payments to
counties not later than May 1 of each fiscal year. While the
legislation was not enacted, the DOI received a very strong message
from Congress and NACo that payments need to be made in a timely
fashion.
STATUS QUO
On October 3, 2008, Congress enacted the Emergency Economic
Stabilization Act of 2008 (PL 110-343) which authorized counties to
receive their full PILT entitlement from FY 2008 through FY 2012. Until
the passage of the EESA, appropriation levels had never reached
authorized levels. Counties received payments totaling $393.4 million
in FY 2012. Full mandatory funding for FY 2013 (minus a 5.1 percent
sequestration cut) will be available for counties through the enactment
of the Moving Ahead for Progress in the 21st Century Act (P.L. 112-141)
last year.
Currently, the Department of the Interior has one remaining payment
that will be disbursed in June 2013. Congress will be required to act
in order to maintain mandatory funding for fiscal years FY 2014 and
beyond. Currently, no legislation has been introduced in the 113th
Congress to provide continued funding for the PILT program. In the
112th Congress, many members of the Senate Energy and Natural Resources
Committee including Chairman Ron Wyden (D-OR) and Ranking Member Lisa
Murkowski (R-AK) sponsored the County Payments Reauthorization Act of
2011 (S. 1692) which would have provided secure mandatory funding for
PILT through FY 2017. NACo appreciates the longstanding commitment from
this Committee to the PILT program and commits to working with the
Congress to achieve a multiyear commitment to full mandatory funding
for PILT.
Last week Senate Budget Committee Chairwoman Patty Murray (D-WA)
made continued funding of the Payment in Lieu of Taxes (PILT) program
and the reauthorization of the Secure Rural Schools and Community Self-
Determination Act a priority in the proposed committee budget for
fiscal year 2014. The proposed budget resolution included a deficit
neutral reserve fund for rural counties and schools to provide for the
reauthorization of the Secure Rural Schools program and/or changes to
the PILT program. The deficit neutral reserve fund language sets the
stage for a much needed legislative solution to continue forest
payments to counties and continued mandatory funding for PILT. Similar
language had been included in House Budget Chairman Paul Ryan's (R-WI)
budget proposal for FY 2012 and FY 2013, but was removed in the FY 2014
request. The President has not yet released a budget proposal to
Congress for FY 2014. The commitment from the Senate Budget Committee
provides a great step forward toward securing the government's
financial commitment to rural, public land counties.
POTENTIAL MODIFICATIONS TO PILT
NACo believes several policy modifications should be explored by
Congress to identify ways to make payments to counties more equitable.
A range of possible alternatives should be considered to more evenly
distribute PILT funds to counties to provide greater budget certainty.
Over time, some programmatic anomalies have become evident. Among
these are the non-inclusion of Federal acquisitions, substantially
reduced payments to jurisdictions with large Federal estates, and the
inability of current formulas to account for externally induced costs
resulting from Federal land use by persons originating from outside the
jurisdiction.
Counties have suggested the use of population caps (up to 50,000
persons) may not be the most appropriate method for providing fair
allocation. Depending on the current population of the county, the PILT
payments are capped at pre-determined levels. The use of population
caps fails to accurately demonstrate the actual population of people
being serviced by the county any given day. For example, many counties
with large acreages of federal land and small populations are gateway
communities to recreation or heritage areas, national parks, and scenic
areas. While increases in tourism and recreation can be beneficial to
local economies--counties are burdened with the extra expense to law
enforcement, infrastructure, search/rescue, and road maintenance
budgets as visitor populations are not taken into consideration by the
current PILT formulas. County governments are required by law to
provide services to people--regardless of their place of residence.
The 1994 Act primarily changed the method of establishing the
annual authorization level, but left the basic distribution formulas
intact. Revenue sharing programs identified as prior year payments do
provide additional funding via revenue sharing to county governments,
such as the Mineral Leasing Act and the Secure Rural Schools program.
However, increases in these other payment programs have reduced the
amount of PILT funding annually in many resource dependant counties.
The federal government should not reduce its tax obligation to local
governments, solely because of other land management revenue agreements
between governments.
An example of potential PILT formula inequities effects current
legislation before this committee. Specifically, several Senate Energy
and Natural Resources Committee members have cosponsored the Public
Land Renewable Energy Development Act (S. 279). This legislation would
establish a leasing and royalty system for renewable energy development
on federal lands. Additionally, the legislation would share 25 percent
of revenues with counties with developments in their jurisdictions.
Under the current PILT formula, any new county revenues from
alternative energy development on public lands would be deducted from
the counties annual PILT payment--resulting in no net gain to the
county.
While some revenue sharing payments have diminished as Federal land
use has shifted from revenue-producing use to public outdoor recreation
use, such shifts have not only reduced or altered the inflow of revenue
sharing; they have also created cost impacts to jurisdictions to
provide services such as emergency search and rescue, law enforcement
and increased road maintenance, among other impacts.
PILT is not only an important element to county funding, the fact
that it is indexed to inflation and is paid to counties for general
purposes is critically important so as to assure it retains its
character as a property tax payment and can be utilized for any general
fund purpose. NACo believes the formula should retain this basic
character. Counties with extensive Federal estates, however, receive
lower PILT payments which neither reflect the local government costs
resulting from that estate, or the payment is not fully reflective of
the vastness of such estate within the jurisdiction.
National formulas inadequately account for all the factors present.
NACo has reviewed a number of possible formula changes, but as with any
formula change--there can be ``winners and losers.'' We agree that PILT
should count acres first and consider local population last, if at all.
Equitable distributions can result through modifications to the current
formula to reflect not only acreage and current revenue payments, but
also other factors such as external use pressures that may be present
within some of the jurisdictions.
CONCLUSION
While the United States Senate and the House of Representatives may
approach legislative solutions for funding the PILT program
differently, NACo will continue to urge leadership on both sides of the
isle to act in a spirit of bipartisan and bicameral cooperation and
work together to move a final legislative solution to the President's
desk.
NACo appreciates the opportunity to provide testimony before the
Senate Energy & Natural Resources Committee. I look forward to working
with members of the Committee to develop and pass legislation that will
continue the historic partnership between Federal and county
governments by extending continued mandatory funding for the Payment in
Lieu of Taxes program for fiscal years 2014 and beyond.
Senator Cantwell. Thank you, Mr. Yates.
Mr. Haggerty, thank you very much for being here.Statement
of Mark Haggerty, Policy Analyst at Headwaters Economics,
Bozeman, MT
STATEMENT OF MARK HAGGERTY, POLICY ANALYST, HEADWATERS
ECONOMICS, BOZEMAN, MT
Mr. Haggerty. Thank you, Chair Cantwell and Ranking Member
Murkowski and members of the committee. I'm pleased to join you
today to discuss Secure Rural Schools and PILT.
I'm a policy analyst at Headwaters Economics, an
independent research group based in Montana. We work with
local, State and Federal Government to improve economic and
community development decisions in the West. For a number of
years my research has focused on the role of Federal county
payments and rural economic development. I work closely with
counties in collaborative groups across the West. I appreciate
the important role that county payments play in supporting
local government services in rural economies.
With SRS already expired and funding for PILT in question
there's a risk for counties in returning to a revenue sharing
model with known problems. A revenue sharing approach would
reduce payments overall and expose funding for basic government
services to the tremendous volatility that has characterized
timber markets since the late 1960s. Indeed as figure 1 in my
written testimony shows, Congress has acted repeatedly to
address the volatility and inequitable compensation inherent to
revenue sharing programs.
Today, Congress has an opportunity to extend funding with
minor reforms and build toward a county payment program that
provides stable and predictable payments, directs payments
where they can have the most economic benefit and begins to
lower the cost of the Federal taxpayer over time.
One way these goals can be achieved is by combining SRS and
revenue sharing payments with PILT into a single payment
program. Such a program would maintain continuity with historic
payments, retain the economic needs of adjustment in a SRS and
direct a larger share of funding to rural communities.
Let me briefly review the history that leads us to this
point.
Initially revenue sharing payments were quite small, but
grew dramatically during the post World War II economic and
housing boom. As Federal payments increased volatility became
an important concern. Booms and busts in local and regional
timber markets created uncertainty and generated pressure to
maximize commercial returns.
PILT, instituted in 1976 attempted to address volatility by
using appropriations to shore up payments during times of
commodity price contraction. Yet even with PILT in place total
payments declined by 62 percent during the recession of the
early 1980s.
In 2000 SRS furthered a couple payments from commodity
receipts to help stabilize payment levels. SRS also added an
economics need component to the distribution formula in 2008
addressing concerns about payment equity.
If SRS is not reauthorized the decline in total funding
will be felt most acutely in rural communities. Consider Dawson
County, where I'm from, and I thank Senator Baucus in his
introduction from recognizing Bozeman which is a small,
prosperous, diverse city anchored by a thriving--by our public
lands.
If SRS goes away a $271,000 increase in PILT payments to
Gallatin County will offset most of this loss. In contrast,
Beaverhead County, Montana is a nearby ranching, timber and
tourism dependent county with a small population and a budget
more dependent on county payments. Beaverhead County will not
be able to recoup $1.2 million in annual losses because of the
population limit in the PILT formula. Without SRS rural
counties across the U.S. stand to lose twice as much as
metropolitan counties and will receive only about one-third of
total payments.
Continuing appropriations and single payment reforms can
resolve these long standing challenges associated with
volatility and reverse what may become an increasingly
metropolitan program.
This program would combine SRS and revenue sharing payments
with PILT.
It would provide stable and predictable payments by
maintaining the decoupling between county distributions and the
funding source.
It would benefit rural communities by raising the
population ceiling payment based on the acres of protected
public lands and direct payments to counties that have the
greatest economic needs.
Map one in my written testimony shows how the single
payment program would change the distribution payments for
every county in the country if total funding for SRS and PILT
together declined by 44 million from 2011 funding levels.
I want to draw your attention to Central Idaho to show how
the single payment approach could work.
The Clearwater Basin Collaborative is a partnership with 21
tribal, Federal, State, local, industry and conservation
associations united by a shared vision, to enhance and protect
the ecological and the economic health of the Clearwater Basin.
A single PILT payment moves the goals of the collaborative
forward in ways that the status quo cannot. Predictable and
stable payments will support a consensus approach and allow
greater flexibility in achieving multiple goals including
greater predictability for timber, recreation, forest and
watershed restoration and conservation.
For the counties, knowing that they can support their rural
schools and maintain roads is fundamental to retaining families
and existing businesses and to start creating new jobs. In
contrast returning to a revenue sharing model threatens to re-
entrench the battle lines over Federal management and re-expose
counties to payment uncertainty.
Thank you for your attention to this critical issue. I look
forward to answering any questions you may have.
[The prepared statement of Mr. Haggerty follows:]
Prepared Statement of Mark Haggerty, Policy Analyst, Headwaters
Economics, Bozeman, MT
Thank you Chairman Wyden, Ranking Member Murkowski, and members of
the Committee. I am pleased to join you today to discuss the Secure
Rural Schools (SRS) and Payments in Lieu of Taxes (PILT) county
payments programs. As a policy analyst at Headwaters Economics, I work
closely with counties and collaborative groups across the West. I
appreciate the important role county payments play in supporting local
government services and rural economies.
Headwaters Economics is an independent research group based in
Montana that works with local, county, and state governments to improve
economic and community development decisions in the West.
For a number of years my research has focused on the role of
federal county payments in rural economic development. We have
developed white papers analyzing outcomes of different county payment
scenarios based on current law and proposed policy options on a county-
by-county basis. Headwaters Economics also worked as a contractor to
the the Forest Service and BLM to develop a free software tool (the
Economic Profile System-Human Dimensions Toolkit) that generates county
level reports on all federal land payment programs, including SRS and
PILT. Please refer to the appendix for a summary of this work.
The Opportunity to Reform County Payments
With SRS already expired and funding for PILT in question, there is
a risk for counties of returning to a revenue sharing model that has
known problems. A revenue sharing approach would reduce overall
payments to counties and also would expose funding for basic government
services to the tremendous volatility that has characterized timber
markets since the late 1960s. Indeed, the current PILT and SRS programs
were developed to address the challenges inherent to a revenue sharing
approach.
Faced with the challenges, Congress has an opportunity today to
implement minor reforms to create a county payment program that
advances rural economic development, forest restoration, and
conservation goals while avoiding the volatility risks associated with
direct revenue sharing payments.
Figure 1*. Key Developments in the History of County Payments
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* All figures and maps have been retained in committee files.
Combining SRS and revenue sharing with PILT, and making small
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changes to the PILT formula, can achieve three critical goals:
1. Provide fair, stable, and predictable payments to
counties.
2. Target payments where they can have the most economic
benefit.
3. Reduce costs to federal taxpayers.
Let me first briefly review the history of county payments,
summarized in Figure 1, which shows the fluctuating value of federal
reimbursements to counties along with the dates of landmark reforms.
Congress Has Repeatedly Reformed County Payments to Respond to Changing
Needs
These reforms, made by Congress to respond to changing economic and
political conditions, demonstrate the long-term flexibility of the
program. Today, with the SRS program expired and the need to re-
appropriate PILT after 2013, Congress again is poised to consider
reforms to county payments that reflect changing budget realities and
the fiscal and economic need of local governments with significant
acres of public lands.
Payments Originally Linked to Commodity Receipts
The policy origin of Forest Service payments to counties in 1908 is
clear: as compensation for public ownership of the Forest Reserves, the
federal government initiated payments to counties in lieu of paying
property taxes.\1\ These payments were funded from commercial receipts
generated on public lands, and counties could use the payments to fund
roads and schools.\2\
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\1\ Act of May 23, 1908, Pub. L. No. 60-136 (the Twenty-Five
Percent Payment).
\2\ Federal legislation mandated payments fund county roads and
schools, but left to states how to allocate these funds between these
two services. See Congressional Research Service Memorandum, Forest
Service Revenue-Sharing Payments: Distribution System. November 19,
1999. Ross Gorte.
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In 1937, the Bureau of Land Management (BLM) began sharing
commercial receipts generated on the Oregon and California Railroad
Grant Lands (O&C) with counties and schools along the same model as the
Forest Service.\3\
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\3\ The main difference is that the county government share of
payments is not restricted to roads but can be used for any
governmental purpose. See: O&C Lands Act, Pub. L. No. 74-405, tit.
II(a) (1937).
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The value of initial Forest Service and BLM O&C revenue sharing
payments was insignificant to most counties for the first 30 years.\4\
From 1908 to 1942, payments averaged less than $10 million nation-wide
in real terms. After World War II, when commodities from the National
Forests and BLM O&C lands helped to fuel the nation's housing boom,
revenue sharing payments provided significant funding to counties. From
1945 to 1980, payments averaged $391 million, reaching a high of $1.2
billion in 1977.
---------------------------------------------------------------------------
\4\ Revenue sharing payments are estimated from historic timber cut
and sold reports from the Forest Service at the national level. Source:
USDA Forest Service. All values in this paragraph are offered in real
dollars.
---------------------------------------------------------------------------
Reforms Made to Address Volatility and Incentives Inherent to Commodity
Payments
After WWII, many counties, particularly in the Pacific Northwest,
grew to depend on timber for jobs and income, and payments to counties
supported significant portions of local school and county budgets. As
payments became more important, the use of commodity receipts as a
funding source started to show several weaknesses.
Volatility in commodity extraction in the 1960s and 1970s made it
difficult for local government to plan for and provide quality public
services consistently on an annual basis. In 1970, the U.S. Public
Lands Law Review Commission wrote: ``Although they were originally
designed to offset the tax immunity of Federal Lands, the existing
revenue-sharing programs do not meet a standard of equity and fair
treatment either to state and local governments or to the Federal
taxpayers.''\5\
---------------------------------------------------------------------------
\5\ United States Public Land Law Review Commission. 1970. ``One
third of the Nation's land: a report to the President and to the
Congress.'' Washington, D.C.:273
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The report added that payments based on commercial activities
created perverse incentives for counties such that ``pressures can be
generated to institute programs that will produce revenue, though such
programs might be in conflict with good conservation practices.''\6\ By
conservation practices the authors meant the sustainable use of public
land resources for commercial activities and environmental conservation
including new national parks or other land designations that
potentially limit revenue sharing payments.
---------------------------------------------------------------------------
\6\ Ibid.
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Concerns about stability and predictability eventually led
Congress, in 1976, to pass Payments in Lieu of Taxes (PILT) in addition
to the existing revenue sharing payments.
PILT interacts with Forest Service revenue sharing payments as a
shock absorber. When revenue sharing payments decline, counties are
eligible for larger PILT payments. When revenue sharing payments rise
during boom years, the PILT formula responds with lower
appropriations.\7\
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\7\ Schuster, Ervin G. 1995. ``PILT--its purpose and performance.''
Journal of Forestry. 93(8):31-35 and Corn, M. Lynne. 2008. PILT
(Payments in Lieu of Taxes): Somewhat Simplified. Congressional
Research Service (CRS) Report RL-31392.
---------------------------------------------------------------------------
Yet even with PILT in place, total payments declined by 62 percent
during the recession of the early 1980s.
Payments Have Been Decoupled from Commodity Receipts
More recently, changing economic conditions along with new goals
for public land management slowed the pace of logging on federal land,
lowering revenue sharing payments to counties by more than 90 percent
in some areas.\8\ The Northwest Forest Plan that set new management
goals for forests in the Pacific Northwest included the first
``transition payments'' to counties-a recognition that changing
management goals that reduce resource extraction also reduce local
government payments. The so-called ``spotted owl'' payments decoupled
the link between extraction and county compensation by guaranteeing a
stable, albeit declining, annual payment funded by federal
appropriations.
---------------------------------------------------------------------------
\8\ Gorte, Ross W. Reauthorizing the Secure Rural Schools and
Community Self-Determination Act of 2000.Congressional Research Service
(CRS-R41303). June 2010. Washington, D.C.
---------------------------------------------------------------------------
The decline in timber receipts felt most acutely in the Pacific
Northwest was also occurring across the rest of the National Forests.
In 2000, Congress passed the Secure Rural Schools and Community Self-
Determination Act (SRS) that effectively extended transition payments
to the rest of the country.\9\ Initially authorized for six years, SRS
provided optional payments equal to 85 percent of the highest three
years of revenue sharing payments between 1986 and 1999.\10\
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\9\ Secure Rural Schools and Community Self-Determination Act of
2000, Pub. L. No. 106-393. Payment information is available from the
Forest Service website at http://www.fs.fed.us/srs/ (last accessed 11/
22/10).
\10\ Under Section 102(a) and 103(a), states eligible to receive
Forest Service and/or BLM revenue sharing payments can elect to receive
either (1) the Twenty-Five Percent (Forest Service) or Fifty Percent
(BLM) Payment or (2) the ``full payment amount,'' calculated as the
average of the three highest yearly revenue sharing payments from FY
1986 to FY 1999. The SRS payment was tied to the average of the three
highest historical payments to each state as a means of further
reducing the volatility of timber receipts at the county level. Under
the 2000 version of the SRS Act, funding for payments to states and
counties is derived from revenues, fees, penalties, or miscellaneous
receipts received by the federal government from activities of the
Forest Service on National Forest land, and the Bureau of Land
Management on revested and reconveyed grant lands (lands returned to
federal ownership). Pub. L. No. 106-393, Sec. Sec. 102(b)(3),
103(b)(2). To the extent of any shortfall, payments are derived from
Treasury funds not otherwise appropriated.
---------------------------------------------------------------------------
In SRS, Congress ended the reliance of most counties on commodity
receipt-based payments that were unlikely to return to historic highs.
Decoupling payments from commodity receipts reduced the importance of
producing commodities in order to generate revenue for county payments.
It also opened the possibility for new collaborative efforts to address
restoration, stewardship, and conservation goals on public lands.
SRS Promoted Economic Diversification and Reflected Costs Associated
with Public Lands
In Title II and Title III of SRS, Congress introduced new purposes
to the county payments program. Title II provided public land managers
and communities with limited but important resources for collaboration
and on-the-ground work such as stewardship and restoration projects
that create jobs and improve forest health (counties that receive more
than $100,000 from SRS must allocate 15-to-20 percent between Title II
and Title III).
Title II dollars are retained by the federal government and spent
on public lands activities following the recommendations of Resource
Advisory Committees (RACs). Title II could fund infrastructure,
restoration, stewardship, and other projects on public lands. Title II
was the first time the county payments program set aside funding for
the direct purpose of creating economic opportunities in counties that
have public lands. The funds were also used to improve forest health,
aiding in transitioning counties away from dependence on commodities by
creating new jobs in restoration and forest stewardship.
Title III of SRS represented another important reform: it made
explicit for the first time the links between federal lands and the
direct demands those lands create for county emergency services and
wildland fire safety. Title III funds could be used on special county
projects including reimbursement for emergency services provided on
federal lands and funding for community fire plans and fire-wise
activities.
The abnormally harsh fire season in 2000, described at the time as
the worst fire season in the United States since 1910, likely
influenced Congress to include funding for wildfire preparedness in
Title III.\11\ Whereas the 2000 legislation provided funding for
projects in six broad areas, subsequent reauthorizations limited
funding to projects in three specific areas, two concerned with
wildfire preparedness and the third funding emergency services and
search and rescue activities on public lands.
---------------------------------------------------------------------------
\11\ U.S. Fire Administration, 2000 Wildland Fire Season, http://
www.usfa.dhs.gov/downloads/pdf/tfrs/v1i2-508.pdf (last accessed 3/16/
2010).
---------------------------------------------------------------------------
SRS Reforms in 2008 Adjusted Payments Based on Economic Need
Congress made other important reforms in 2008 to adjust the SRS
distribution formula based on the per-capita personal income in each
eligible county. The goal was to direct relatively higher payments to
counties with low per-capita personal income. Reforming the
distribution formula based on economic need reflected a desire to make
payments to counties that need them most.
Two other mechanisms were incorporated into the 2008
reauthorization to achieve a more equitable distribution of payments
nation-wide, based on more general concerns about the distribution of
payments. The SRS ``base share'' formula was reformed to include the
total acres of federal lands along with historic revenue sharing
payments, and certain ``covered states'' (California, Louisiana,
Oregon, Pennsylvania, South Carolina, South Dakota, Texas and
Washington) were given ``transition payments'' pegged to the sums paid
to states and counties in 2006 under the SRS Act as then
implemented.\12\
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\12\ U.S. Forest Service, Title I-Secure Payments for State and
Counties Containing Federal Land. Pub. L. No. 110-343, tit.VI, Sec.
103. http://www.fs.fed.us/srs/Title-I.shtml (last accessed 11/22/10).
---------------------------------------------------------------------------
The 2008 reauthorization of SRS provided a significant temporary
increase in transition funding, making payments close to historic highs
(on a national level, only payments in the years 1977 to 1980 exceeded
the FY 2008 payment levels in real terms). In essence, the two latter
reforms (not based on economic need) had the effect of distributing the
increased appropriation more broadly to all states eligible to receive
payments.\13\
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\13\ It is unclear from the legislative history why certain states
were selected to be ``covered states,'' but concerns over equitable
distribution of payments likely played a role in California, Oregon,
and Washington being included. A political motivation also lay behind
expanding the number of states receiving higher SRS payments as it may
increase the likelihood of future authorizations.
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SRS accomplished more equitable distribution through adjustments to
the formula.\14\ SRS payments were based on three factors: a base
payment considering 1) historic timber receipts and 2) acres of Forest
Service and BLM land which is 3) adjusted by per capita personal
income.
---------------------------------------------------------------------------
\14\ The existing SRS formula is described in an eight-page
technical document, ``Calculating Payments,'' available on the Secure
Rural Schools website: http://www.fs.fed.us/srs/docs/calculations.pdf
(last accessed 11/22/10). Each county's payment was based partially on
historic timber receipts and partially on the number of acres of
federal land within the county's boundaries. A county's payment was
also dependent on how many of their peers opted into the SRS payment
formula. The fewer counties that elected to receive SRS payments
(opting to receive their revenue sharing payment instead), the higher
the SRS payment to each county was, and vice-versa.
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County Payment = Base Payment / Per Capita Income Adjustment.
The pressing issues associated with SRS's expiration are continued
volatility, decreased total revenue, and a return to an inefficient,
inequitable distribution of payments.
Continued Volatility
The recent national recession made it clear that the boom and bust
nature of commodity markets persists and can be especially damaging in
resource-dependent counties in the West. Headwaters Economics recently
analyzed all 413 counties of the 11 contiguous western states in the
context of the recent recession, and looked at how this economic
downturn varied from earlier business cycles.\15\
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\15\ Patricia H. Gude, Ray Rasker, Kingsford L. Jones, Julia H.
Haggerty, Mark C. Greenwood. 2012. The Recession and the New Economy of
the West: The Familiar Boom and Bust Cycle? In press in the Journal of
Growth and Change. http://headwaterseconomics.org/wphw/wp-content/
uploads/Western_Counties_Recession_Paper.pdf.
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Four critical findings from this analysis about economic
performance during the recession are:
1. The faster a county's population grew from 2000 to 2007,
on average, the faster the area tended to lose jobs during the
recession.
2. Counties that were more timber-dependent tended to lose
jobs at a faster rate during the recession.
3. On average, counties with higher education rates (based on
the percent of adults with a college degree) experienced lower
rates of job loss.
4. Higher government employment was also associated with
lower rates of job loss.
The study results underscore important tenets of economic
development in a modern economy such as the importance of education in
the emerging global economy and the stabilizing effect of government
employment during economic contraction. Of particular relevance to the
topic of county payments from federal lands is the danger of over-
reliance on single sectors, in particular those that fluctuate with
commodity markets, such as the timber industry.
Timber-dependent counties received SRS and PILT payments during the
recession which helped stabilize county finances. These already
vulnerable county economies could have faced even greater challenges if
their payments were dependent on low commodity prices, as would be the
case in the absence of some form of SRS reauthorization.
Exposure to boom-bust commodity cycles is a constant hazard for
remote rural counties in the West. By reforming county payment programs
to focus on the long-term security of funding for basic government
services, Congress can help create a buffer against this hazard.
Inequitable Distribution For Rural Counties
If SRS is not reauthorized, the decline in total funding will be
felt most acutely in rural communities. Consider Gallatin County,
Montana, where I live, which has a prosperous diverse economy anchored
by the thriving city of Bozeman. If SRS goes away, a $271,000 increase
in PILT payments will offset most of this loss. In contrast, Beaverhead
County, Montana, is a nearby ranching, timber, and tourism-dependent
county with a small population and a budget more dependent on county
payments. Beaverhead County will not be able to recoup $1.2 million
losses because of the population limit in the PILT formula.
The PILT formula places an upper limit on the total payment each
county can receive based on the county's population. The population
limit effectively limits the amount any one county can receive, and
lowers the potential cost to the federal treasury if revenue sharing
payments decline precipitously.
If SRS is not reauthorized, two things will occur. The reforms in
SRS that provided for a more equitable distribution of payments based
on per capita personal income will be lost. Moreover, utilizing PILT
only will mean that rural places will experience a disproportionate
share of payment losses. Across the U.S., rural counties stand to lose
twice as much as metropolitan counties and will receive only about one-
third of payments if SRS is not reauthorized.
Single Payment Model Creates Security, Equity, and Efficiency
Here is how a single payment idea could help resolve long-standing
challenges:
1. Combine SRS and revenue sharing payments into a new PILT
formula.
2. Provide stable and predictable payments by maintaining the
decoupling between county distributions and the funding source.
3. Benefit rural counties by raising the population cap based
on acres of protected public lands.
4. Target payments to counties that have the greatest
economic needs.
Table 1 compares the single payment proposal with current and
estimated payments. The single payment proposal reflects the new PILT
formula and a reduction of about $45 million from FY 2011 payment
amounts.
Map 1* in the appendix shows how county-by-county distributions of
a single payment change from FY 2011 payment distributions. For
example, payments are shifted away from metropolitan areas, including
the Puget Sound metropolitan region in Washington, the Wasatch Front in
Utah, and Phoenix and Tucson in Arizona to rural areas in central
Idaho, southern Utah, and coastal Oregon, among others.
---------------------------------------------------------------------------
* The map has been retained in committee file.
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*Increasing the Population Limit
Increasing the population limit for rural counties offers a
mechanism for reversing the shift of payments from rural to urban
counties as total payments decline. Raising the population limit allows
rural counties to receive a larger share of appropriated dollars at any
given funding level.
Under the current PILT formula, each county's PILT payment is equal
to the number of eligible acres in each county times an entitlement
amount of $2.47 in FY 2012. This combined value is then compared to the
population ceiling limitation amount, and the final PILT payment is the
lesser of the two.
The single payment proposal raises the population ceiling
limitation, but not the entitlement amount, for each county. The
ceiling is raised by an amount equal to the number of acres of
protected public lands in each county times the entitlement amount of
$2.47 in FY 2012.\16\
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\16\ We utilized a list of protected lands as defined in the EPS-
HDT software as ``Type A'' lands. These include: National Parks and
Preserves (NPS), Wilderness (NPS, FWS, FS, BLM), National Conservation
Areas (BLM), National Monuments (NPS, FS, BLM), National Recreation
Areas (NPS, FS, BLM), National Wild and Scenic Rivers (NPS, FS, BLM),
Waterfowl Production Areas (FWS), Wildlife Management Areas (FWS),
Research Natural Areas (FS, BLM), Areas of Critical Environmental
Concern (BLM), and National Wildlife Refuges (FWS). See http://
headwaterseconomics.org/tools/eps-hdt.
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Raising the population ceiling limit increases payments only for
counties where such limits currently apply. As a result, a larger share
of payments will go to rural counties that have protected public
lands.\17\
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\17\ PILT currently authorizes higher payments for newly acquired
Wilderness and National Park acres for a period of five years. The
additional payment covers lands acquired by the federal government to
be included in the National Park system or as national forest
Wilderness. The law states that ``The Interior Secretary shall make
payments only for the five fiscal years after the fiscal year in which
the interest in land is acquired. Under guidelines the Secretary
prescribes, the unit of general local government receiving the payment
from the Secretary shall distribute payments proportionally to units
and school districts that lost real property taxes because of the
acquisition of the interest. A unit receiving a distribution may use a
payment for any governmental purpose.'' P.L. 97-258, as amended Section
6904. Additional Payments.
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Economic Performance Adjustment
The SRS formula contained an ``income adjustment'' based on per
capita personal income. Counties with relatively lower levels of income
received a larger share of the total appropriated amount. By
comparison, counties with relatively higher levels of income would
receive lower payments.
The single payment idea retains the adjustment to ensure equity of
payments and to lower total appropriations by directing payments to
those counties that need them most.
While the past SRS formula used just one measure of economic
performance, we recommend using a set of five variables: percentage of
households below poverty,\18\ median household income,\19\ average
earnings per job,\20\ percentage of the workforce with a bachelor's
degree or higher\21\ and county typology (on a continuum: metro, metro
outlying, micro, micro outlying, and rural).\22\
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\18\ The term poverty, as used by the U.S. Census Bureau, is
defined at: http://factfinder.census.gov/servlet/
MetadataBrowserServlet? type=subject&id= POVERTYSF3&
dsspName=DEC_2000_SF3&back= update&_lang=en (last accessed 9/9/10).
\19\ For the full definition of Median Household Income, see the
U.S. Bureau of the Census: http://factfinder.census.gov/home/en/epss/
glossary_i.html#income (last accessed 9/9/10).
\20\ For the full definition of Average Earnings per Job, see the
Bureau of Economic Analysis, U.S. Department of Commerce: http://
www.bea.gov/regional/definitions/ (last accessed 9/9/10).
\21\ Education is one of the most important indicators of the
potential for economic success, and lack of education is closely linked
to poverty. Studies show that areas whose workforce has a higher-than-
average education level grow faster, have higher incomes, and suffer
less during economic downturns than other regions. Education rates make
a difference in earnings and unemployment rates. In 2009, the average
weekly earnings for someone with a bachelor's degree was $1,025,
compared to $626 per week for someone with a high school diploma. While
in 2009 the unemployment rate among college graduates was 5.2 percent,
for high school graduates it was 9.7 percent. For information on the
relationship between level of education, earnings, year-round
employment, and unemployment rates, see: U.S. Census Bureau's 2002
publication ``The Big Payoff: Educational Attainment and Synthetic
Estimates of Work-Life Earnings.'' http://www.census.gov/prod/2002pubs/
p23-210.pdf (last accessed 9/9/10). The wage and unemployment effects
of education are available from the Bureau of Labor Statistics: http://
www.bls.gov/emp/ep--chart--001.htm (last accessed 10/23/10).
\22\ Definitions of county typologies can be found at the U.S.
Census Bureau.http://www.census.gov/population/www/metroareas/
metroarea.html (last accessed 9/9/10).
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These metrics used to assess economic need are widely utilized and
well understood. Map 2 in the appendix shows the relative economic
performance of counties using these measures from best (light blue) to
worst (dark blue).
During the last 30 years many rural counties have experienced a
dramatic shift in their economies. Counties have diversified into more
service-related occupations while commodity-related sectors have
contributed less than three percent of total new jobs from 1990 to
2008.\23\
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\23\ U.S. Department of Commerce. 2010. Bureau of Economic
Analysis, Regional Economic Information System, Washington, D.C.
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Not all public lands counties, however, have been able to create a
diverse, robust, and resilient economy with a healthy tax base.
Poverty, low-paying jobs, lack of education, isolation from markets,
and difficulties competing in expanding service industries are
persistent challenges for some counties.
Favoring the neediest counties for relatively higher county
payments is consistent with the original goal of SRS to help counties
diversify economically and to provide equity in payments to counties
and for federal taxpayers.\24\
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\24\ The States of Oregon, Washington, and California received the
lion's share of the approximately $2.7 billion of funding distributed
under Titles I, II and III of the SRS Act between 2000 and 2007. Oregon
received by far the largest share, with $1.2 billion, while California
and Washington received $473 million and $322 million respectively.
From one perspective, this result was exactly as it should have been.
SRS was initially passed to make up for lost timber receipts, and so it
was only appropriate that the Pacific Northwest, historically a great
timber producing region, benefitted disproportionately. States that did
not have historically high timber harvesting levels were understandably
less enthusiastic. The Bush Administration favored revising the funding
formula to take stock of current economic conditions. Mark Rey, Under
Secretary of Natural Resources for the Department of Agriculture,
testified ``Many now largely urban or suburban counties in the west are
getting a substantial amount of money . . . because the formula was a
reflection of the historical timber receipts that those counties
enjoyed . . . at an earlier time. Many of those counties . . . are
pretty vibrant right now.'' The Administration felt that urbanized
areas that could generate funds from traditional municipal revenue
sources ought to do so, rather than rely on federal handouts. As a
result, the distribution formula was changed in 2008 so that other
states realize a more substantial benefit from it. Secure Rural Schools
and Community Self-Determination Reauthorization Act of 2007: Hearing
on S. 380 Before the Subcommittee on Public Lands and Forests,
Committee on Energy and Natural Resources, 110th Cong. 1 (2007).
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By adjusting the single payment formula to give preferential
treatment to the neediest counties, the federal payments will serve an
important goal of economic development, job creation, and poverty
alleviation. In addition, using a broader and improved set of criteria
to link payments to economic performance and opportunity has the
advantage of more efficiently targeting payments to those counties that
need payments the most.
Benefits for Counties and Rural Economies
I want to draw your attention to Idaho to show how a single payment
model could support ongoing collaborative resource management and
economic development efforts.
Founded in 2008, the Clearwater Basin Collaborative (CBC) is an
innovative partnership of twenty-one tribal, federal, state, local,
industry, and conservation associations in central Idaho united by a
shared vision: ``to enhance and protect the ecological and economic
health of the forests, rivers, and communities within the Clearwater
Basin.'' The CBC seeks to develop resource management priorities
collaboratively among historically often conflicted parties, finding
solutions that take all stakeholders' interests into account.
Diverse stakeholder interests include creating predictability for
commercial timber supply, improving recreation access, and
accomplishing forest restoration and conservation goals, all across a
large landscape. The CBC is a progressive approach to creating
solutions to conflicts. This is the kind of approach that could be
thwarted in the absence of effective reforms to the county payments
programs.
The (CBC) has considered alternatives to SRS. Analysis of proposals
that rely on commodity extraction as the main source of revenue-and as
the main purpose of public lands management-suggest this approach will
not provide predictable or sufficient payments to area counties and
schools. Current proposals to return to a revenue sharing model and
transfer federal public land management to the states clearly threaten
to alienate some CBC stakeholders.
If SRS is not reauthorized, Idaho and Clearwater counties will
receive $6 million less annually than they did in FY 2011. In contract,
the single payment proposal would allow the two counties to retain
similar or higher payments compared to 2011 levels, even with lower
appropriations.
Equally important, a single PILT payment moves the goals of the CBC
forward in ways that the status quo cannot. The new single payment
formula supports a consensus approach to solving shared goals with
stronger outcomes for local economies and forest health. In contrast,
returning to a revenue sharing model would re-entrench the battle lines
over federal management and re-expose counties to payment uncertainty.
Conclusion
For these reasons, we see a critical role for continued
appropriations as part of future federal payments to counties. The
uncertainty and decreased funding levels that accompany a return to
revenue sharing are not desirable. The history of the program shows
that revenue sharing will work only for a handful of counties
nationally, and even then will fail to provide certainty year over
year.
By comparison, receipts will rise and economic development
opportunities will be greatest where payment certainty is provided.
Local and regional efforts to create jobs and improve forest health
will succeed if all sides have greater certainty: certainty and
fairness for counties; certainty for industry of increased supply; and
certainty for conservation interests for continued restoration and
protections, among others.
Maintaining decoupling between the size and relative distribution
of payments and the source of revenue creates a framework that can
accommodate new dedicated funding streams from public lands. This basic
arrangement provides a path to reducing the need for federal
appropriations over rising payments over time, buffered from the booms
and busts in commodity markets. It also allows new revenue to come from
anywhere, and ideas range from higher oil and gas royalties, to new
leasing fees, to a carbon tax.
Thank you for your attention to this issue.
Senator Cantwell. Thank you, Mr. Haggerty. Yes, we will
have questions. But let's hear from Dr. O'Laughlin, our last
witness, and then we'll go to questions.
Thank you.
STATEMENT OF JAY O'LAUGHLIN, PROFESSOR OF FORESTRY & POLICY
SCIENCES, AND DIRECTOR, POLICY ANALYSIS GROUP, COLLEGE OF
NATURAL RESOURCES, UNIVERSITY OF IDAHO, MOSCOW, ID
Mr. O'Laughlin. Thank you, Chair Cantwell, Ranking Member
Murkowski and members of the committee.
My name is Jay O'Laughlin. I'm a Professor of Forestry and
Policy Sciences at the University of Idaho. For 23 years, full
time Director of a Policy Analysis Research Unit created by the
Idaho legislature.
Senator Risch, thank you for your leadership back then.
For 80 years counties received 25 percent of revenues from
Federal lands primarily timber sales. But since 1990 timber
sales have declined substantially by more than 90 percent in
some areas. There are good reasons to rejuvenate a Federal
timber sale program. Revenue sharing with counties is just one
of them.
My main point here is the triple win from forest
management.
First, improve forest conditions, especially sorely needed
wildfire resiliency.
Second, consumer products made from wood and its byproducts
including renewable energy feed stocks for the full range of
applications. Biomass thermal, we heat our campus with sawmill
residues. Biopower and biofuels, wood products and energy
byproducts help make our nation more self-reliant.
Third, jobs in rural communities.
Some Westerners are so dissatisfied with the current
situation that they're calling for changing ownership of some
Federal lands. But I want to talk about changing the rules, not
changing ownership.
Three ideas for generating more revenue than the current
system does are No. 1, rejuvenating the Federal timber sale
program.
No. 2, creating a property tax equivalency system.
No. 3, testing the trust land management model with pilot
projects.
No. 1, the timber sale program. The Forest Service believes
that at least 65 million acres of its lands could be improved
with restoration treatments including 12 million acres that
need to be thinned with logging equipment before fire can be
safely restored. The Forest Service is mechanically treating
about 200,000 acres per year and from that providing about 2.5
billion board feet per year.
Rejuvenating the Federal timber sale program is the path to
the triple win. Some analysts believe that the 1980s level of
12 billion board feet per year is sustainable. Instead, I
suggest harvesting half of that which is the current allowable
sale quantity total of 6 billion board feet per year.
But price is as important as quantity. Lots of
administrative rules affect markets and prices. If sold at
prices the States of Washington and Idaho get for their trust
land timber sales the 25 percent share for counties would match
Secure Rural Schools act payments.
No. 2, property tax equivalency system. This would make
Federal payments to counties equivalent to property taxes as if
the land were privately owned. This approach may be difficult
to design and implement, but each of the States has been doing
this for a long time and fairness issues can be worked out.
Third, trust land management. School trust lands were
granted from the public domain at statehood. That's part of a
bargain that the States would not tax the Federal lands within
their boundaries. States were to generate revenues to support
public schools either by selling the lands or retaining
ownership and selling commodities from the land, like timber,
forage and minerals.
Trusts work. In the contiguous 48 States, 45 million acres
of land grants are managed as trusts. They provide billions of
dollars for education and other public purposes. The trust land
management model is flexible. It could be adapted to limit land
sales and adapted to include our RAC like local advisory
committee to work with the trust land managers and to make
biological diversity one of the trust missions. It could be
organized to provide moneys for that purpose.
In conclusion trust land management is our oldest and most
durable resource management model. It is worth testing in
several different national forests in order to properly gauge
the magnitude of the triple win from actively managing public
forests under a different organizational structure.
Thank you for this opportunity. I look forward to
questions.
[The prepared statement of Mr. O'Laughlin follows:]
Prepared Statement of Jay O'Laughlin, Professor of Forestry & Policy
Sciences, and Director, Policy Analysis Group, College of Natural
Resources, University of Idaho, Moscow, ID
INTRODUCTION
Chairman Wyden, Ranking Member Murkowski, members of the committee
and staff, it is a great honor to be here today. My name is Jay
O'Laughlin. I live in Moscow, Idaho, where I am professor of forestry &
policy sciences at the University of Idaho and for 23 years, full-time
director of a policy analysis research unit created by the Idaho
Legislature in 1989 and continuously funded since then. Our mandate is
to provide objective analysis of resource and land-use issues Idahoans
care about. We care about the federal lands that make up almost 64
percent of the state's land base, a percentage exceeded only by Nevada
and Utah. Almost 39 percent of Idaho is in the National Forest System;
Oregon at 25 percent ranks a distant second.
Congress enacted the Secure Rural Schools and Community Self-
Determination Act of 2000 (SRS) as a temporary, optional program of
payments based on historic revenues.\1\ These payments compensate
counties for the tax-exempt status of federal lands, following a policy
dating to 1906 that counties receive a percentage of agency revenues,
primarily from timber sales. Since 1989, however, timber sales have
declined substantially, by more than 90 percent in some areas.\2\ On an
annual payment basis, Oregon benefits the most from SRS, followed by
California, then Washington and Idaho, with Montana not far behind.\3\
Based on the percent of the county revenue for schools and roads that
comes from federal payments, many counties in Idaho, Montana, New
Mexico, and Oregon depend heavily on these payments.\4\
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\1\ P.L. 106-393, 114 Stat. 1607 (October 30, 2000). http://
www.fs.usda.gov/Internet/FSE--DOCUMENTS/stelprdb5260244.pdf
\2\ Gorte, R.W. (2010). Reauthorizing the Secure Rural Schools and
Community Self-Determination Act of 2000. Congressional Research
Service Report CR41303, Washington, D.C. 14 pp
\3\ Id
\4\ Headwaters Economics (2010). County Payments, Jobs, and Forest
Health: Ideas for Reforming the Secure Rural Schools and Community
Self-Determination Act (SRS) and Payments in Lieu of Taxes (PILT).
Headwaters Economics, Bozeman, MT. 96 pp. http://
headwaterseconomics.org/wphw/wp-content/uploads/
Reform_County_Payments_WhitePaper_LowRes.pdf
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According to the U.S. Forest Service, the condition of at least 65
million acres of National Forest System lands could be improved with
restoration treatments.\5\ The removed woody biomass can be
manufactured into useful consumer products and the residuals used to
produce energy. It takes people to do this work so in turn forest
restoration helps revitalize our rural communities.
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\5\ U.S. Forest Service (2012). Increasing the Pace of Restoration
and Job Creation on Our National Forests. Unnumbered publication,
Washington, DC. 8 pp. http://www.fs.fed.us/publications/restoration/
restoration.pdf
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My main point is that active forest restoration results in a
triple-win: first, improved conditions, including wildfire resiliency;
second, consumer products and energy feedstocks, both helping make our
nation more self-reliant; and third, jobs in rural communities. The
triple win is related to the county payments programs because a
meaningful federal timber sale program with a continued revenue-sharing
policy would greatly reduce the need for federal land payments.
In 2011, I was asked by the University's Research Office to respond
to a query from one of our two members of the U.S. House of
Representatives (Ra#l Labrador) for information about the Secure Rural
Schools Act and the trust land management model used to manage school
trust lands granted to Idaho, and many other states, to support public
education. These were not new issues for me,\6\ so I assembled an Issue
Brief report for the congressman's staff and walked them through it.\7\
Updated and more detailed portions of it follow.
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\6\ O'Laughlin, J., W.R. Hundrup & P.S. Cook. (1998). History and
Analysis of Federally Administered Lands in Idaho. PAG Report 16,
University of Idaho, Moscow, 125 pp. http://www.uidaho.edu//media/
Files/orgs/CNR/PAG/Reports/PAGReport16
\7\ O'Laughlin, J. (2011). Secure Rural Schools Program
Reauthorization, U.S. Forest Service Timber Sale Program, and Trust
Land Management. Issue Brief No. 14, Policy Analysis Group, College of
Natural Resources, University of Idaho. 16 pp. http://www.uidaho.edu//
media/Files/orgs/CNR/PAG/Reports/PAG--IB-14--8-14-11
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I begin with a Problem Statement, then identify and describe Three
Options for providing funds to counties: 1) rejuvenate the program for
federal Timber Sales and Revenue-Sharing, 2) create a Property Tax
Equivalency system for federal lands, and 3) test the Trust Land
Management model with pilot projects in some selected areas. My
Conclusion is that some kind of action, including temporary extension
of SRS until something else is developed, is better than no action.
PROBLEM STATEMENT
Unless reauthorized by Congress, payments to the counties under the
SRS and Payments in Lieu of Taxes (PILT) programs are history and would
have consequences. Some counties will be hard pressed to maintain local
roads and schools without some form of payment to compensate for tax-
exempt federal lands.
The economic impact of losing the SRS county payments program was
presented in a 2010 consultant's report prepared for the Partnership
for Rural America:
The loss of [SRS] money has annual losses for the counties
and schools currently funded. The losses are not simply to
local construction, education and conservation services and
their allied industries. The industries affected by these
changes are far and wide based on how construction workers,
educators and conservation services employees spend their money
and how these rural economies work. The reduction of [SRS]
funding not only reduces jobs in these directly-affected
industries, but also affects industries such as medical and
dental offices, banking, auto repair, grocery and other retail
stores, restaurants and bars, and many others. The loss of $467
million of this funding leads to various businesses throughout
the United States losing almost $1.459 billion in revenues,
government at all levels losing over $225 million in tax
receipts, and over 11,460 people losing their job.\8\
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\8\ Eyler, R. (2010). Rural Policy: Secure Rural Schools Act
Economic Impact Analysis. Economic Forensics and Analytics, Petaluma,
CA. 6 pp. (Dr. Eyler is Chair, Economics Dept., Sonoma State
University, CA.) http://www.partnershipforruralamerica.org/pdf/
Economic_Impact_Analysis.pdf
Also facing its demise is the SRS feature embodied in the
collaborative efforts of Resource Advisory Committee (RACs) to use SRS
Title II funding for a wide variety of projects that might not
otherwise be funded. Although timber projects can be approved under
Title II, very few have been.\9\ Social scientists who have studied
RACs in northern California report that most of the Title II funds were
used to improve roads, wildlife habitat, and reduce invasive weeds.\10\
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\9\ GAO (2010). Update on the status of the merchantable timber
contracting pilot program [under SRS Title II]. Letter of Anu K. Mittal
to congressional committees, Government Accountability Office,
Washington, DC. March 4, 10 pp. http://www.gao.gov/new.items/
d10379r.pdf
\10\ Kusel, J., et al. (2006). Assessment of the Secure Rural
Schools and Community Self-Determination Act. Sierra Institute for
Community and Environment, Taylorsville, California. 235 pp. http://
www.sierrainstitute.us/archives/COMPLETE_REPORT.pdf
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The RACs do good work in Idaho, and could do much more. The
collaboration between seemingly disparate interests working towards a
common interest has proven to be a valuable model that could lead to
more good things. We wanted to use the RAC concept on a larger scale in
Idaho and in 2004 a subcommittee of this committee held a hearing on
our proposal.\11\ It developed from a state task force charged by the
legislature to develop cooperative arrangements with federal managers.
After considerable time and effort, bills were introduced in the U.S.
House and Senate. Had the Clearwater Basin Project Act passed, 2.7
million acres of National Forest System lands in north central Idaho
now would be a pilot project in which a committee patterned after the
RACs would work with federal managers on all forest activities, not
just special projects under SRS Title II.\12\
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\11\ Hearing before the Subcommittee on Public Lands and Forests,
Committee on Energy and Natural Resources, U.S. Senate, on S. 433, ``A
Bill to provide for Enhanced Collaborative Forest Stewardship
Management of the Clearwater and Nez Perce National Forests in Idaho,''
Washington, D.C. (March 24, 2004). http://www.gpo.gov/fdsys/pkg/CHRG-
108shrg94830/pdf/CHRG-108shrg94830.pdf
\12\ Idaho State Board of Land Commissioners (2013). ``About the
Federal Lands Task Force'' webpage. Idaho Department of Lands, Boise,
ID. http://www.idl.idaho.gov/LandBoard/fltf.htm
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THREE OPTIONS
If there is no congressional action this year, some counties have
warned that they will face whatever one might call the local government
equivalent of bankruptcy. The 25 percent revenue-sharing provisions in
law since 1908 would remain in place, however.
Some western state politicians are calling for changing ownership
of portions of federal land holdings. In 2012 several states took
action. Utah passed a law promising that if the federal government does
not ``extinguish title'' to a large portion of the federal lands and
give them to the state, the matter will be pursued via litigation.
Similar legislation in Arizona was vetoed by the governor. The Wyoming
legislature debated the issues and created a study commission; at this
writing Idaho is poised to do the same.
I want to talk about changing the rules, not changing ownership.
Unless the rules are changed, ownership change would not make much
difference. Federal managers must follow many rules, and some could be
improved, especially the National Environmental Policy Act and National
Forest Management Act.\13\
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\13\ According to one estimate, ``it is taking about 70% of the
Forest Service's land management budget to comply with planning and
environmental review for projects, leaving only 30% for implementation
and work on the ground.'' Partin, Tom, ``Subcommittee to review NEPA
cost.'' American Forest Resource Council newsletter, Portland, Oregon,
January 23, 2013. http://www.amforest.org/newsletters/browse/
afrc_news_-_january_23
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I address three ideas for generating more revenue that the current
system does: 1) rejuvenating the federal timber sale program; 2)
replacing SRS and PILT with a property tax equivalency payment system;
and 3) testing the trust land management model with pilot projects.
1. TIMBER SALES AND REVENUE-SHARING
After World War II, returning veterans wanted and deserved the
American dream-a home of their own. National Forest System lands
provided a substantial portion of the timber necessary to do that.
Building roads and mills to access and process timber strengthened
rural communities. After Congress passed laws in the 1970s requiring
Forest Service managers to involve the public and analyze environmental
impacts, the decision process was opened to judicial scrutiny. In
response to advocacy demands and court decisions, in 1990 the federal
timber sale program was ratcheted down (Figure 1*). In the 40 years
prior to that, between 1950 and 1989, an average of 9.5 billion board
feet (BBF) per year were harvested from national forests. Between 1990
and 2012, the average dropped by almost two-thirds, to 3.5 BBF per
year. The current administration wants to increase from the current
level of 2.5 BBF to 3 BBF per year.\14\
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\14\ U.S. Forest Service, Increasing the Pace of Restoration and
Job Creation (2012, supra note 5).
* All figures have been retained in committee file.
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Figure 1. National forest timber sold and harvested, 1905-2012
(sold data not available before 1940).\15\
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\15\ Source: U.S. Forest Service (note: timber sold data before
1940 are not available). http://www.fs.fed.us/forestmanagement/
documents/sold-harvest/documents/1905-2012_Natl_Summary_Graph.pdf
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Coincidentally, after 1990 the number of acres burned by wildfires
in the western states increased (Figure 2*). In the 40 years between
1950 and 1989, an average of 800,000 acres per year burned. Between
1990 and 2012, the average increased by a factor of 3.7 to 3 million
acres burned per year. This includes a modern record of 7.4 million
acres burned in 2012. The increase results from the combined effects of
accumulated fuels and longer, dryer fire seasons.
Figure 2. Acres burned by wildfires in 11 western States, 1916-
2012.\16\
\16\ Source data from National Interagency Fire Center, Boise,
Idaho.
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We cannot do much about the weather, but we can reduce fuels in
areas that pose high risks to the things people value. Western national
forests have an over-accumulation of vegetation that fuels destructive
wildfires\17\. As Forest Service Chief Emeritus Dale Bosworth put it,
``We have some 73 million acres of national forest land at risk from
wildland fires that could compromise human safety and ecosystem
integrity. . . . The situation is simply not sustainable-not socially,
not economically, not ecologically.''\18\
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\17\ GAO (1999). Western National Forests: A Cohesive Strategy is
Needed to Address Catastrophic Wildfire Threats. Report no. GAO-RCED-
99-65. Washington, DC: U.S. Government Accountability Office,
Washington, D.C. 60 pp. www.gao.gov/archive/1999/rc99065.pdf
\18\ Bosworth, D. (2003). ``Fires and forest health: our future is
at stake.'' Fire Management Today 63(2): 4-11. http://www.fs.fed.us/
fire/fmt/fmt_pdfs/ fmt63-2.pdf#firesand foresthealthourfutureisatstake
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Restoration treatments that improve forest conditions by reducing
wildfire hazards provide a triple win. As U.S. Forest Service
scientists put it, ``Implementation of any significant fuel reduction
effort will generate large volumes of biomass and require the
development of additional workforce and operations capacity in western
forests.''\19\
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\19\ U.S. Forest Service (2005). A Strategic Assessment of Forest
Biomass and Fuel Reduction Treatments in Western States. General
Technical Report RMRS-GTR-149, U.S. Department of Agriculture, Forest
Service, Rocky Mountain Research Station, Fort Collins, CO. 17 pp.
http://www.fs.fed.us/rm/pubs/rmrs_gtr149.pdf
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As noted before, there are at least 65 million acres of National
Forests System lands that could be improved by restoration treatments.
The Forest Service relies primarily on fire as its tool, treating 3.5
to 4 million acres per year. However, 12.5 million acres need to be
thinned with logging equipment before fire can be safely restored. In
2011, approximately 200,000 acres were mechanically treated; timber
removals amounted to 2.4 BBF of timber. In 2012 that increased to 2.5
BBF, and the agency wants to increase the pace of restoration removals
to 3 BBF feet per year.\20\
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\20\ U.S. Forest Service, Increasing the Pace of Restoration and
Job Creation (2012, supra note 5).
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At the current harvest level, the Forest Service is removing about
6 percent of the annual growth. Mortality takes 6 times that, or 36
percent of annual growth.\21\ So each year a large amount of additional
wood fiber, some green, and a lot of it dead, is added to the forest
fire fuel complex. Compare this to the late 1980s, when national forest
timber harvests peaked at 12 BBF per year. Those harvests were
equivalent to half of the annual growth, and mortality was one-fourth.
The forest accumulated a substantial amount of additional timber
volume, but not as much in more recent years because of reduced
harvests.
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\21\
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How much timber harvest would be needed to provide revenues
equivalent to SRS payments?\22\ The reply depends mostly on timber
prices, and the answer is, not too surprisingly, about 12 BBF. In the
late 1980s, national forest timber in the west sold for an average of
$107 per thousand board feet (or MBF). Adjusted for inflation, that is
about $206 per MBF in today's dollars. The most recent price data for
national forest timber sales in the west averages about $50 per MBF. By
comparison, in 2012 the average stumpage price for sawlogs from Idaho
state lands was $196 per MBF, an indicator that perhaps the Forest
Service could attain revenues capable of providing SRS payments with 12
BBF per year by rejuvenating a timber sale program.
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\22\ See O'Laughlin, J. (2007). ``Q4. What quantity of timber
harvest would match the Craig-Wyden payments?'' Pp. 3-4, in, Timber
Harvests and Receipts from National Forest System Lands in Idaho. PAG
Issue Brief No. 10, Univ. of Idaho, Moscow. 13 pp. http://
www.uidaho.edu//media/Files/orgs/CNR/PAG/Issue%20Briefs/PAG_IB10_natl-
forest-timber-sales.ashx
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Many interest groups support federal timber sales, including the
Society of American Foresters.\23\ This is the path to the triple win.
Some analysts believe that 12 BBF per year from the national forests is
sustainable.\24\ The growth to removals ratio of 2:1 in the late 1980s
was consistent with sustainability standards. There is more annual
growth today, which can be an asset or liability, depending on how
forests are managed. Although a revamped timber sale program at 12 BBF
per year could eliminate the need for SRS payments, other issues
remain. The social acceptability aspects of sustainable forest
management are perhaps a more difficult barrier to overcome than
physical sustained yield and economic viability.
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\23\ SAF (2012). Timber Harvesting on Federal, State, and Other
Public Lands. Position Statement, Society of American Foresters,
Bethesda, Maryland. 4 pp. http://www.eforester.org/fp/documents/
timber_harvesting.pdf
\24\ E.g., Fedkiw, J. (1998). Managing Multiple Uses on National
Forests, 1905-1995: A 90-year learning experience and it isn't finished
yet. U.S. Dept. of Agriculture, Forest Service, Washington, DC. 284 pp.
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Because of record-setting wildfires in many parts of the West
during the past decade, some groups are advocating forest restoration
via large-scale vegetation treatments, including the Western Governors'
Association.\25\ Professional foresters in Idaho, Nevada, Utah, eastern
Washington, and western Wyoming support this approach.\26\ As noted
earlier, fuel treatments on the scale necessary to reduce hazardous
fuels will generate large volumes of woody biomass and substantial
additions to the workforce.\27\ This is the path towards the triple
win.
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\25\ WGA (2011). Large Scale Forest Restoration. Policy Resolution
11-01, Western Governors' Association, Denver, CO. 4 pp. http://
www.westgov.org/policies/doc_download/1390-11-0
\26\ Society of American Foresters (2011). Restoring and
Maintaining Resilient Landscapes via Active Vegetation Management at
Large Scales Helps Create Fire-Adapted Communities and Improve
Responses to Wildfires. Inland Empire SAF and Intermountain SAF Joint
Position Statement, commenting on the Western Region component of the
National Cohesive Wildland Fire Management Strategy being prepared in
response to a requirement of the FLAME Act of 2009. 9 pp. http://
www.usu.edu/saf/position-11-0803.pdf
\27\ U.S. Forest Service, Biomass from Fuel Treatments in Western
States (2005, supra note 19).
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2. PROPERTY TAX EQUIVALENCY
The idea of replacing SRS and PILT payments with a tax equivalency
system would make federal payments to counties equivalent to what they
would be paid in property taxes if the land were privately owned. This
is not a novel idea. According to a Congressional Research Service
analyst, this approach ``may be very difficult if not impossible.''\28\
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\28\ Gorte, Reauthorizing SRS (2010, supra note 2, p. 4).
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Consider, however, that the states tax timberlands and it is not
particularly difficult. In Idaho, there are 3.1 million acres of
private timberlands, taxed somewhere between two dollars and seven
dollars per acre, averaging out at five dollars per acre.\29\ At that
rate, the twelve million acres of National Forest timberlands in Idaho,
minus about 6 million acres of roadless area timberlands that will
never be harvested, would provide roughly $35 million to the counties,
and BLM's half-million acres of timberlands another $2.5 million. Idaho
receives $27.4 million under SRS. Spread across 20.4 million acres of
NFS lands, this is $1.34 per acre, but spread across the productive 6
million acres of timberlands, it is about $4.50 per acre.
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\29\ Cook, P.S. & J. O'Laughlin. 2001. Taxing Forest Property:
Analysis of Alternative Methods and Impacts in Idaho. PAG Report No.
20, University of Idaho, Moscow, 35 pp. http://www.uidaho.edu//media/
Files/orgs/CNR/PAG/Reports/PAGReport20
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Idaho ranks fourth in revenue-sharing payments, behind Oregon,
California, and Washington. In 1989, the 25 percent revenue-sharing
payments for the entire National Forest System peaked at $361 million,
and about $339 million of that came from timber production activities.
Spread across the 98 million acres of National Forest System
timberlands, minus 50 million acres of roadless areas for a net 48
million acres of operable timberlands, that is a payment averaging
about $7 per acre. But of course, roadless areas, rangelands, and other
areas not producing timber would need to pay their way at some rate
under this system.
The states have competent property tax assessors and
administrators. If they were not taxing forest properties fairly,
political outcry and subsequent adjustment would surely follow. Given
the task, these professionals could devise a fair and workable system
for the federal lands. Some differences between states would need to be
ironed out by an oversight commission.
3. TRUST LAND MANAGEMENT
School trust lands came as grants from the public domain at
statehood; part of a bargain that states would not tax federal lands
within their boundaries. States were to generate revenues for
supporting public schools, either by selling the lands, or retaining
ownership and selling commodities from the land, such as timber,
forage, and minerals.
Trusts work, and ``Trust land management is our nation's most
ancient and durable resource policy.''\30\ In the contiguous 48 states,
45 million acres of land grants to the states are managed under this
model. These lands provide billions of dollars for education and other
public purposes.\31\ Several solid principles serve as general guides
for managing land under the trust concept: clarity, accountability,
enforceability, perpetuity, and prudence.\32\ Two leading examples of
states that retained and now manage timberlands for revenue production
are in the State of Washington and also Idaho.\33\ Recently some
interest has been expressed in applying the trust land management model
to selected federal lands. I support that.
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\30\ Souder, J.A. & S.K. Fairfax (1996). State Trust Lands:
History, Management and Sustainable Use. University of Kansas Press,
Lawrence, KS. 360 pp.
\31\ To be exact, $4.5 billion annually in the early 1990s,
according to Souder & Fairfax, State Trust Lands (1996, supra note 30).
\32\ Fairfax, S.K. (1999). Lessons for the Forest Service from
State Trust Land Management Experience. Discussion Paper 99-16,
Resources for the Future, Washington, D.C.; see also Souder & Fairfax,
State Trust Lands (1996, supra note 30).
\33\ O'Laughlin, J., S.F. Hamilton & P.S. Cook (2011). Idaho's
Endowment Lands: A Matter of Sacred Trust, second edition. PAG Report
No. 1, 2d ed., University of Idaho, Moscow, 35 pp. http://
www.uidaho.edu//media/Files/orgs/CNR/PAG/Reports/
Endowment%20Lands%20Report%208-7-11
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The trust land management model is flexible and could be adapted to
promote biological diversity as a trust mission.\34\ It is not
difficult, as portions of revenue from commodity sales could be
directed into special funds. Ten years ago I was asked by the Society
of American Foresters to testify before Congress about the Idaho
Federal Lands Task Force, and specifically about adapting the trust
land management model for National Forest System lands.\35\ Information
from these earlier writings is as relevant today as a decade ago.
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\34\ O'Laughlin, J. (2000). Trust Concepts Applied to the Federal
Public Lands: A New Approach for Sustaining Human Communities and
Biological Diversity. Paper presented to the Idaho State Board of Land
Commissioners' Federal Lands Task Force Working Group, Boise, Idaho. 11
pp. http://www.uidaho.edu//media/Files/orgs/CNR/PAG/other%20pubs/New/
2000_trust-land-mgmt-concepts
\35\ Clawson, M. (1984). ``Major Alternatives for the Future
Management of Federal Lands.'' Pp. 195-234, in, Rethinking the Public
Lands, S. Brubaker, ed. Resources for the Future, Washington, D.C.
(Emphasis added.]
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Dr. Marion Clawson is an inspiration to forest policy specialists.
He had a long and distinguished career before his passing in 1998. In
the 1950s he was BLM director. He was a prolific and insightful scholar
in residence at Resources for the Future, a pre-eminent think tank in
the nation's capital, and he served as RFF's president. He wrote
Forests for Whom and for What?-still my favorite.\36\ During the
Sagebrush Rebellion era of the mid-1980s, Clawson wrote,
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\36\ Clawson. M. (1975). Forests for Whom and for What? Resources
for the Future, Washington, D.C.175 pp.
I reject any idea that we today are less imaginative and
resourceful than men and women who pressed for the
establishment of the national forests, national parks, and
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grazing districts. We too can innovate; let us try.\37\
\37\ Clawson, M. (1984). ``Major Alternatives for the Future
Management of Federal Lands.'' Pp. 195-234, in, Rethinking the Public
Lands, S. Brubaker, ed. Resources for the Future, Washington, D.C.
(Emphasis added.]
---------------------------------------------------------------------------
What should we try? Trusts work. More than a decade ago two parcels
of federal land were set up as trusts-Valles Caldera Trust on National
Forest System lands in New Mexico and Presidio Trust in California.
Please let us put more trusts to work for our rural communities and
schools.
CONCLUSION
As our task force learned and documented in Idaho 15 years ago, the
federal land management system is broken and needs to be fixed.\38\
Extension of SRS and PILT is appropriate for fulfilling past promises
until a more permanent system can be developed, tested and implemented.
Rejuvenating a timber sale program provides many societal benefits.
Given appropriate policy direction, our resource managers can and will
work with their fellow citizens to figure out what sustainable forest
management looks like on the land, a better place to do that than in
court. For lands that do not produce timber, some form of payment from
a property tax equivalency system seems a reasonable approach to help
alleviate some current fairness problems. Last, but not least, trust
land management is our oldest and most durable model, and worth testing
in several places.
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\38\ Idaho State Board of Land Commissioners, ``About the Federal
Lands Task Force'' (supra note 20).
Senator Cantwell. Thank you, Dr. O'Laughlin. Thank you so
much for your testimony. I'm sure that Senator Risch
appreciates you being here today, as I do.
We're going to have a round of questions. I think I want to
start with you, Mr. Haggerty.
You propose something different but I'm a little concerned
that, you know, part of our challenge is getting this
legislation through the Congress. But not all our colleagues
understand rural communities or the significant dedication that
it takes, you know, from transportation, emergency management,
fire suppression, roads, schools, all of those things. They
don't understand the interrelatedness of having Federal forest
lands and those infrastructure needs that are necessary to keep
them maintained.
So I wanted--how do you think your proposal would be
scrutinized in terms of payments being shifted around as
opposed to being directly linked as a Federal obligation and
then Mr. Pearce or Yates, or anybody else who wants to comment
on that.
Mr. Haggerty. Senator Cantwell, thanks for the question. I
think one of the things that we are trying to accomplish with
some alternative proposals is to make it clear that, you know,
the communities have to be first in this. Rural communities are
struggling across the country. We recognize their plight.
It's also true that we need some real solutions for our
forests. We've heard a lot today about the need for restoration
from the Chief. We certainly have fire issues in the forests.
But what we're trying to do is find a way to separate out
the revenue requirement in paying counties as compensation for
non taxable Federal lands and the work that we need to do in
supporting rural communities with jobs and treating our
forest's health issues. The reason that we're concerned about
returning to a revenue sharing program is that a revenue
sharing program is volatile. It's always been volatile in the
past. We expect that it will be volatile in the future.
Counties need money every year. They need to have some
certainty that they can take care of services, fund good
schools and maintain roads.
So the other part of right now is we need a way to fund the
current programs. The current programs have existing problems.
The biggest problem that we've identified is that most of the
Secure Rural Schools and PILT funding, as appropriations
decline, are starting to be directed more to urban counties
than to rural counties.
It's a problem. This is a rural program. Rural counties
need these payments the most.
So what we're trying to do is not necessarily make a
statement about any one way forward. But we want to offer a
proposal to the table that tries to meet some goals.
One, provide predictability and fairness to counties.
Two, we want to direct payments to the rural communities
where they can do the most good.
Third, we want to make sure that we can reduce spending in
the Federal treasury over time.
So that's the nature or that's the, kind of, goals behind
our proposal. The specific components within it I think can be
discussed. So.
Senator Cantwell. Thank you.
Mr. Pearce or Dr. O'Laughlin or Mr. Yates, any comment from
that?
Mr. Pearce. The conversation with the other parts of the
country about rural communities, if I heard the question right.
Senator Cantwell. About whether----
Mr. Pearce. Yes.
Senator Cantwell. Mr. Haggerty's proposal is somewhat not
having it.
Mr. Pearce. Right.
Senator Cantwell. He's saying have it generally related as
opposed to a specific formula. Obviously our challenge is a lot
of our colleagues don't understand this to begin with. They
think that we're talking about something here that's some give
away to rural communities when, in fact, it is part of what is
required for management of our national forests.
If you're going to have that much land tied up you have to
access it.
Mr. Pearce. Yes.
Senator Cantwell. How are you going to access it if you
don't have roads? How are you going to have communities that
are going to be the support system for those national forests
if they don't--if they can't have emergency services or schools
or what have you? So the notion that you're going to lock up
all these acres and somehow draw a line around it. Say oh,
you're only going to go in every so often.
I think the first panel did a really good job. My 2
colleagues here from the Chairman, Ranking Member of talking
about what happens to the forest if they don't have access. So
all of this is about--this is the support system that goes with
our national forest.
Mr. Pearce. Absolutely.
To comment on that. I spoke earlier about just 2 searches,
just 2, that were nearly $750,000 when you combined them. We,
within my county, my home county, we have to run an ambulance
service in the middle of the forest because of the amount of
traffic that travels through that portion of the forest. It's a
separate ambulance service and they cost $90 to $100,000 per
year to manage that ambulance service.
So you're absolutely right. One of the issues for us is
that PILT for better or worse as a payment for in lieu of taxes
is a great plan if you have a lot of acreage. But as you know
on the west side of the mountains you have big forests that
grow very fast that aren't necessarily large acreages.
For instance in my county, if I were to trade SRS for PILT,
I would get less than a million dollars in PILT funding
compared to an SRS payment even at this last year of over $4
million when you bring the schools and so on into it. So we do
perform services that are much bigger than an ``11,000 person
county'' would normally perform.
Senator Cantwell. Thank you for that. I'm going to turn it
back to the Chairman.
But I'll just point out I meet so many people who will say,
oh yes I went--they don't always know the exact name, but they
went to the Skamania Lodge which is a national conference area.
I meet so many people here from DC and they say oh, I went to
your State. We went to this lodge. I'm not sure the Skamania
Lodge would be there if you didn't--it has to have support. It
has to have access to roads. It has to have a community and all
those things are part of this resource.
So, anyway I'll turn it back over to the Chairman and
welcome back.
The Chairman [presiding]. Thank you, Senator Cantwell.
Where are we in terms of colleagues?
Very good, well let's let Senator Murkowski and Senator
Risch ask any questions. I apologize to the panel as well
because even by Senate standards this is a hectic morning. I
thank Senator Cantwell.
Senator Risch.
Senator Risch. Mr. Chairman, thank you.
Thank you, Senator Murkowski for yielding to me. I do have
another meeting I've got to go to. But I did want to comment
briefly on this.
Starting with you, Dr. O'Laughlin, you know, I've been to
the new building where they house the natural resources and
forestry school. When I went there we actually did walk uphill
in deep snow to Morrill Hall, which I know you've been on. It's
the highest building on campus. It wasn't nearly as warm and
cozy as the new school is.
Thank you for your testimony. I really appreciate that
you're bringing a, more of a, standing back and looking at this
globally as far as the problem is concerned. Because I think
most people, as has been pointed out, don't understand the
problems we have out West, you know.
They really don't comprehend that the Constitution said
every State was supposed to be admitted on equal footing. Turns
out some States were more equal than others. We wind up with
such a great swath of our State owned by the Federal
Government.
So as a result of that the government really, the Federal
Government, has not been paying its fair share of what it gets
out of the services from the local communities. They are very
substantial, as has been pointed out here.
But I like the idea of rethinking this, of stepping back
and having another look at this. When I was Governor we wrote a
road less plan for Idaho, as you're probably familiar with.
That was the result of doing just what you did here. That is
stepping back and doing it differently than the way they've
been trying to do it for 40 years.
The result was the collaborative method that came up with
rule. We have the only rule in the United States today in
Idaho. It was written by Idahoans and is now administered by
Idahoans. We have the--Tom, in the Forest Service to thank for
that and the Administration for joining us on that.
You came to the right place because I have found that both
Senator Wyden and Senator Murkowski are very good about being
open minded and re-looking at things from a global standpoint.
Although Senator Wyden wasn't here when you testified, I
suspect he's going to be very interested in your testimony as
to the 3 new ideas you've had. I'm sure there's no pride in
authorship. I'm sure there's probably some other ideas that we
may have a look at.
But this need for a stable stream of income for the
counties, school districts, road districts is so important. You
know, it doesn't matter here to the Federal Government. They
just borrow money. They don't have it, not a problem. They just
go out and borrow it.
But the cities and counties and the local districts do not
have that luxury, most are required to balance their budget. So
we really appreciate that. I think by--if we did step back and
have a look at some different ways in which we should do this.
One of the things I found on the road less issue that took
me was one of the keys was what had been done for 40 years is
everybody that wrote a rule for road less tried to write a rule
that one size fits all. To me it was so obvious when I started
to look at that that this was not going to work. As a result of
that, we did it differently, as you know, in Idaho.
I think maybe that may be, as we sit here and talk about
this today, maybe one of the keys that we get the local States,
the local units of government involved in this to craft
something that works there that may not work in another area.
Obviously the Forest Service is going to have to be in the--
it's going to have to be open to this. BLM is going to have to
be open to this.
But if we work together maybe there's a way to do this to
where we can get the local involvement instead of a one size
fits all since that doesn't seem to work.
So thank you for your testimony here today. Thank all of
you for coming today. I think probably, as far as I'm concerned
this is been eye opening, that maybe we ought to step back.
You've certainly been a pioneer on this, Senator Wyden. We
all thank you for that.
Obviously we've learned lessons through it. Maybe what we
ought to do is take those lessons and take a step back and re-
look at how we're going to do this from a global standpoint.
The Chairman. Senator Risch, thank you very much for those
kind words. I think your point about stepping back and looking
at areas where we could come up with some fresh approaches. One
of the things that's striking about this debate is there may be
some new ways to build on some of the approaches that have
actually worked like these Resource Advisory Committee. I mean
these Resource Advisory Committee, we hear. I see Mr.
O'Laughlin, I believe is your constituent, you're from Idaho
aren't you, sir?
Mr. O'Laughlin. The great State of Idaho.
The Chairman. The great State of Idaho.
Senator Risch. The great State of Idaho, Senator Wyden.
The Chairman. OK. I looked at your testimony. We'll have
some things we want to ask. I mean this is something that I
think we've had now for a few years. Industry folks say they
like it. Environmental folks say they like it.
I remember, like it was yesterday, Senator Craig and I
having conversations about how we would come up with some
resolution with respect to Secure Rural Schools. Of course any
time back then people talked about it they talked about
sufficiency language. I said, bad history on that because we
remember all of the litigation, the fighting and, you know, the
protests. Let's try to find something as an alternative.
I remember when we hit on that I said this really looks,
just as you said, like something that would have a chance to
bring people together. I think we ought to be trying to do
that, you know, again.
Senator Risch. You know, you're right on that, Senator
Wyden. When we did the road less rule in Idaho we provided in
the rule for a RAC type committee. It was modeled after this
committee. They are the ones in Idaho that are actually meeting
regularly to administer the road less lands and whatever
happens in those road less lands.
It is made up of the same type of collaborative group that
we had that wrote the rule. It really is working. As you say,
people who are not customarily talking with each other, it has
worked very well.
So, thank you, thank you for providing that model to start
with, but----
The Chairman. We're going to be working closely with you,
Senator Risch.
Let's--Senator Murkowski I know has a question or 2 and
then I'm going to touch on something and we'll wrap up. You all
have been very patient. Thank you.
Senator Murkowski. Thank you, Mr. Chairman.
I do want to acknowledge the work of my colleague on what
he did in Idaho with the road less rule. We wish that we had
been able to accomplish the same. Maybe we need to look to
collaborate a little bit more because we're so snarled up on
road less right now in Alaska.
But that's a subject for another hearing.
I want to thank those of you who have participated here
today. I think that this panel was very helpful just in
offering up some suggestions out there, helping us think a
little bit outside the box. I think this is the difference
between being within the Administration and saying we can't say
anything about proposals. We'll talk to you later.
You folks that are--that have put some study into it, some
thoughts, maybe a little bit of controversy here. Mr. Yates and
Mr. Haggerty are clearly on opposite sides when you talk about
the consolidation, if you will, between PILT and Secure Rural
Schools. But that's good for us to hear. It's good for us to
look at what the options might be.
Dr. O'Laughlin, I appreciate what you have done in just
your assessment, your review of alternate governance
arrangements for our national forest systems. I think this is
critically important for us to look at. I would hope or maybe I
could just ask you to look at what Alaska is proposing and give
me your comments on that whether you think that that might be
something that is workable.
We think it's an alternative. The Governor certainly does.
His task force has put that out. But I'd be curious to know
your comments if you would be willing to provide them.
I wanted to ask you a question, Mr. Pearce. It's my
understanding that it's your position and that of the
Partnership for Rural America that you would--you'd say OK,
well give up Secure Rural School dollars to get forest
production. Then it's not just about restoration. It's about
restoring timber production. Is that a fair assessment of your
views?
Mr. Pearce. Not to be contrary, but I would disagree that
that's where we're at.
Senator Murkowski. OK. Alright.
Mr. Pearce. Senator, if I could speak to it for just a
moment.
We are pursuing a collaborative conversation with folks
across the country from all sides taking the RAC model as a
model, as a matter of fact, to try to bring organizations
together to have the same kinds of conversations that RACs are
having at the local level. Then our principles for pursuing
forest health legislation, we do in fact feel very strongly
there has to be bridge funding. The short term bridge funding
for counties is absolutely necessary.
There's just no question about it. We have counties that--
--
Senator Murkowski. But we also recognize that we've been
doing short term--
Mr. Pearce. Absolutely. Thank----
Senator Murkowski. Bridge funding for a long time. That
bridge is getting real long.
Mr. Pearce. We agree with you. Absolutely. As a
commissioner who spent the last 8 years literally half of my
time here because of that funding. I can tell you that.
But I think what I would like to say is our mission is long
term economic vitality for rural communities. It must include
legislation that requires active, sustainable forest management
to achieve resilient forest lands managed by both the U.S.
Forest Service and Oregon and California forests. We want to
see landscape restoration because we know that landscape
restoration means timber.
We know that these monocultural forests that were planted
by man that are not natural. In order to bring them to a
natural State will require a very long time to do that. It will
require timber production. It will require jobs in our small
communities and companies to come into our small communities.
I would argue that we are really looking at legislation for
forest management on the broadest possible plane you can find.
Senator Murkowski. That would certainly include active----
Mr. Pearce. Active.
Senator Murkowski. Forest management reforms.
Mr. Pearce. Absolutely. Yes, ma'am.
Senator Murkowski. Yes. Yes. Good.
Gentlemen, thank you all for not only your testimony here
this morning, but for your efforts as we work to find a more
long term, sustainable solution.
I'll just conclude with a note to Mr. Haggerty. You
mentioned that if we go to a revenue sharing type of concept
that injects volatility. I would suggest that our Federal
Government and what we do with our budget deliberations on an
annual basis is equally volatile. We would like to figure out a
better path. I think you would all agree with us on that.
So we look forward to working with all of you.
Mr. Chairman, I suggested when--before the prior panel was
dismissed I had asked specific questions of the Chief and of
Ms. Haze as to what they might provide to the Committee in
terms of recommendations. They were politically vague which is
not surprising. But I did suggest that perhaps we all would
have an opportunity to sit down with them and pick their brains
and that of these individuals again that are focused on some
pretty important stuff.
So, look forward to doing that with you.
The Chairman. Let's do it.
Thank you, Senator Murkowski.
I apologize again to all of you for having to be out. I did
read your testimony last night. I think all of you while having
obviously differing views were trying to be sensitive to the
fact that there is a challenge to try to deal with the short
term and the long term.
I think rather than keeping you any longer I just want to
say we're going to be reaching out to you more in the days
ahead. What's going to be different about this--and essentially
we've had what amounts to 4 reauthorizations, if you kind of
look back through the history, we are going to make sure that
no one tries to put the short term and the long term out there
as if they were mutually exclusive. They are not.
We need to find a way that intertwines. Whether you call it
a bridge or what have you, something that ensures that these
rural communities that have taken such punishing hits in the
last few years, can keep their doors open while in effect the
Congress goes through what very often seems like a slow burn
when it comes to legislation. I think you heard from Senators
today a real desire to look at some fresh ideas with respect to
the long term.
That's why I hit for example on the common bonds between
all the communities where there is Federal land and Federal
water. Literally when I went to Senator Landrieu's State and
Senator Murkowski's State, I was struck by how the
conversations were so similar to the ones we have in rural
Oregon where you have folks from the timber industry who would
like to get the cut up, as I would, working with folks who are
in the environmental community trying to protect some old
growth as I would also like to do.
So I think there is a lot to work with here. As you could
see it's not going to be partisan. Having talked to
Administration officials such as Secretary Vilsack here
recently, I think we're going to see the Administration very
interested in these conversations.
So my apologies for having missed a decent chunk of your
comments. I want you to know I did read your remarks last
night. Clearly you all have subscribed to the idea that it's
time for some new thinking. That's certainly all we can ask
for.
With that the Energy and Natural Resources Committee is
adjourned.
[Whereupon, at 12:27 p.m., the hearing was adjourned.]
[The following statement was received for the record.]
Statement of Athan Manuel, Director, Lands Protection Program,
Sierra Club
On behalf of the Sierra Club's 2.1 million members and activists, I
am writing to support the Committee's examination of both short and
long-term solutions to the challenges posed by the much needed payments
to local governments, via Secure Rural Schools (SRS) and Payment in
Lieu of Taxes (PILT).
As you know, the Secure Rural Schools and Community Self
Determination Act program is expiring, leaving rural communities across
the country in financial risk. This program provides important funding
for schools, community services, and roads in more than 1,900 counties
in 49 States, the District of Columbia, Guam, Puerto Rico, and the U.S.
Virgin Islands. SRS has received broad bipartisan support since its
original passage in 2000 because it helps the economic stability and
sustainability of rural communities. As noted in previous
communications with Committee members and staff, the Sierra Club
encourages a short-term reauthorization of SRS. As the nation struggles
to support public sector jobs and services during a time when the
economies of many rural areas continue to struggle, a short-term
extension of this program provides an opportunity to maintain support
for rural areas as we identify a more sustainable long-term solution.
For more than 100 years, hundreds of counties across the United
States have received payments from the federal government as part of a
compensation process for non-taxable Forest Service and Bureau of Land
Management (BLM) lands. By decoupling payments from commodity receipts
and introducing new funding for projects on public lands, SRS has
helped counties with the transition away from unsustainable dependence
on logging to a more diverse economic base in the face of declining
timber production on public lands and changing economic opportunities
related to restoration and conservation.
As SRS represents only a temporary solution, the Sierra Club is
committed to supporting the Senate's efforts to create a long-term
solution that identifies alternate funding sources that also protect
our nation's wild places, clean air and water, and wildlife. We look
forward to discussing ideas and opportunities with staff, and
continuing to consider how we might best address the needs of rural
communities while maintaining a healthy environment for all to enjoy in
future generations.
As the Committee reviews various proposals, the Sierra Club would
like voice our concern regarding any effort that would essentially
industrialize or privatize our public lands. Such efforts will damage
watersheds and pollute drinking water and put our western water supply
at risk. Our public lands are also our economic engines. The most
recent 2012 report from the Outdoor Industry Association confirms that
the outdoor recreation industry directly supports 6.1 million jobs and
contributes over $646 billion annually to the U.S. economy. Similarly,
the U.S. Forest Service's most recent annual visitor survey showed that
Forest Service lands attracted 166 million visitors in 2011, and that
visitor spending in nearby communities sustained more than 200,000
full- and part-time jobs. At the local level, according to the Bureau
of Land Management, in 2010 there were a total of 6,811 jobs on Oregon
BLM lands associated with recreation, accounting for a total of
$662,400,000 in output. Also, the most recent data from 2011 shows
about 5.5 million visits were recorded on Western Oregon BLM associated
with recreation. Finally, National Parks continued to be important
economic engines for local communities in 2011, with visitors
generating $30.1 billion in economic activity and supporting 252,000
jobs nationwide.
The Sierra Club supports a dual track approach that both secures
the needs of rural communities in the short-term, while we examine
options for a long-term solution that maintains a commitment to the
protection of our nation's natural heritage.
We thank the committee for their commitment to this issue and look
forward to future hearings and discussion on these matters.
APPENDIX
Responses to Additional Questions
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Responses of Mark Haggerty to Questions From Senator Murkowski
Question 1. In your testimony you conclude that continued
decoupling of payments can lead to new dedicated funding streams from
public lands, and you go on to cite oil and gas, and leasing fees. I
find this confusing in that your testimony focuses a great deal on
volatility and the boom and bust cycles of commodity-extraction, yet
why do these extractive uses escape scrutiny? Why does timber get
singled out?
Answer. In our testimony, we reviewed the history of the Forest
Service and Bureau of Land Management (BLM) O&C revenue sharing
programs to highlight the challenges associated with volatility and to
help provide context and information that could be useful in crafting a
long-term solution.
The boom and bust cycles inherent to commodity markets suggests
several things: returning to revenue sharing as the basis for providing
compensation for non-taxable federal lands will result in lower
payments for most communities relative to Secure Rural Schools (SRS),
that compensation to individual counties will vary dramatically in
amount (meaning payments are inequitable for the purpose of tax
compensation), and that payments will be highly uncertain from year to
year.
Revenue sharing from oil and natural gas bonus payments, rents, and
royalties will face similar challenges associated with timber revenue
sharing payments. The testimony does not exclude these revenue sources
from scrutiny, or single out timber.
If decoupling is important to providing stable, predictable
payments for communities dependent on timber, the same will be true for
compensation made to counties more reliant on oil and natural gas to
fund local services and infrastructure.
In other words, compensation made to counties for non-taxable
federal land will best serve the needs of counties if these payments
are decoupled from annual commodity receipts regardless of the source
of those receipts, be it timber, oil and gas, renewable energy, or
other similar tax, fee, or royalty payment.
As Senator Murkowski noted during the hearing, continued
appropriations are no more certain for counties than are payments made
from commodity receipts. That is why the testimony offered
recommendations for reform that will more efficiently and equitably
distribute payments that could also allow Congress to lower the overall
cost of the program. The testimony also offered the observation that
decoupling allows communities, agencies, and Congress to work together
to find ways to identify dedicated sources of funding to reduce or
eliminate the need for appropriations over time. It is up to Congress
to decide how to fund payments in the future, and our brief reference
to ongoing discussions about potential new revenue sources should not
be interpreted as funding recommendations.
Question 2. One of the key purposes of the Secure Rural Schools is
funding for rural schools. What impact does the expiration of the SRS
program have specifically on schools? Does that impact on the schools
vary by state? Please explain. In your explanation please include a
breakdown by state and county of the amounts and percentage of funds
allocated to schools.
Answer. Payments from the Forest Service through the 25 Percent
Fund and the expired SRS program are restricted to fund roads and
schools. Congress left to the states to determine how to allocate
Forest Service payments, and each state allocates a different share of
payments to schools.\1\ Vermont allocates 100 percent of Forest Service
payments to school districts. Most other states allocate between a
quarter and three quarters of payments to schools.
---------------------------------------------------------------------------
\1\ Federal legislation mandated that payments fund county roads
and schools, but left to states how to allocate the funds between these
two services. See Congressional Research Service Memorandum, Forest
Service Revenue-Sharing Payments: Distribution System. November 19,
1999. Ross Gorte. (attached to this document as Appendix A.*
*Appendix A has been retained in committee files.
---------------------------------------------------------------------------
States also differ on how the payments allocated to schools are
distributed. A majority of states pass the funds directly back to local
school districts based on National Forest acreage in each district,
meaning Forest Service payments to schools represent additional revenue
to those districts that have public lands. Some states retain the
Forest Service payments and add them to state school equalization funds
meaning Forest Service payments are distributed to schools across the
state with no basis in National Forest acreage. States that do not
distribute payments directly to local schools include: Arizona,
Arkansas, Colorado, Louisiana, Missouri, Nebraska, New Mexico, Oregon,
Pennsylvania, Tennessee, Vermont, Washington, and Wyoming.\2\
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\2\ An Inquiry into Selected Aspects of Revenue Sharing on Federal
Lands. 2002. A report to the Forest County Payments Committee,
Washington, D.C. Research Unit 4802-Economic Aspects of Forest
Management on Public Lands, Rocky Mountain Research Station, USDA
Forest Service, Missoula, MT.
---------------------------------------------------------------------------
For example, Oregon retains SRS payments in the state equalization
fund and shares SRS funds with all schools in the state. To put the
case of funding for Oregon schools in perspective, it is useful to know
that SRS payments make up a small portion of the Oregon school budget
and that SRS payments are currently paid on a declining annual basis.
In FY 2009, SRS payments to schools in Oregon amounted to $25 million,
which was about one percent of the three billion dollar State School
Fund budget for 2009-2010. If SRS is not renewed and federal land
payments revert to revenue sharing based on commodity production, we
estimate Oregon's schools would receive between four and five million
dollars-or about 0.13 percent of the current State School Fund.\3\
---------------------------------------------------------------------------
\3\ Oregon Department of Education, Oregon State School Fund (SSF).
http://www.ode.state.or.us/search/results/?id=168 (last accessed 11/22/
10).
---------------------------------------------------------------------------
The two important points are that schools with federal lands in
others states that add payments to equalization formula do not benefit
from SRS or the 25% Fund, and because they do not benefit, they will
not be harmed if Forest Service payments decline (if SRS is not
reauthorized). In contrast, in states that do return Forest Service
payments directly to local districts, schools will be exposed to
significant funding declines if SRS is not reauthorized.
It is also important to understand that PILT is designed as a
safety net that provides certain funding to counties if revenue sharing
payments falter. Only county governments are eligible to receive PILT,
and school districts have no similar safety net for declining federal
compensation for non-taxable lands. For example, school districts in
Idaho and Montana are highly exposed to changes in Forest Service
payments because schools will not be compensated by PILT, while schools
in Oregon and Washington will not see significant revenue declines
because they are not direct beneficiaries of Forest Service payments.
The attached map* shows how payments change to both county
governments and school districts only for the county and local share
(25% fund, Title I and Title III) if SRS goes away and PILT is fully
funded. Notice that almost all counties in Washington State will see no
change, other than the four counties subject to the population ceiling
payment amount in PILT. In Montana and Idaho, by contrast, every county
that received an SRS payment will see declines, and these declines
include the impact to school districts.
---------------------------------------------------------------------------
* The map had been retained in committee file.
---------------------------------------------------------------------------
Responses of Mark Haggerty to Questions From Senator Barrasso
Question 1. In your testimony, you make the case county payments
should be decoupled from the source of revenue, as this allows new
revenue to come from anywhere including higher oil and gas royalties,
new leasing fees, and a carbon tax. Are you proposing to redirect
onshore oil and gas revenues that would otherwise go to producing
states such as Wyoming, Colorado, New Mexico, Utah, and Montana to non-
producing states such as Oregon and Washington?
Answer. Under the recently expired SRS program, payments to each
county were determined based on a formula that included historic
revenue sharing payments, the number of acres of federal land in each
county, and an adjustment for per-capita personal income. SRS payments
were funded at a certain level each year that was determined by
Congress. The full SRS authorization was funded first from receipts
generated on public lands and then from the federal Treasury.
If SRS is reauthorized with or without reforms, we do not recommend
that the basic structure of a formula-driven, predictable payment to
counties funded by a combination of receipts from public lands and the
federal Treasury change.
We recommend that Congress maintain decoupling between payments
made to compensate counties for the presence of federal public lands
and annual receipts but do not make any recommendations to the source
of funding. That is for Congress to determine.
Question 2. In general, do you believe higher taxes and additional
fees are good for economic growth and consumers?
Answer. The purpose of the hearing was to examine the options and
challenges related to possible reauthorization and reform of two
federal payment programs for local governments-the recently expired
Secure Rural Schools and Community Self-Determination Act and the
Payment in Lieu of Taxes.
In our testimony, we review the history of revenue sharing payments
to highlight the challenges inherent to funding basic local services
from a volatile federal payment program. Based on this history, we
recommend that a long-term solution to compensation for non-taxable
federal lands maintain the current decoupling between payments to local
governments and annual receipts.
We do not make any recommendations to how the programs should be
funded. We only suggest that if federal land payments to counties are
reauthorized in a way that they are stable, predictable, and equitable,
the source of funding is no longer important to the performance of the
compensation programs and funding could come from a wide variety of
options.
Question 3. In your testimony you state County payments should not
be tied to the boom and bust cycle of commodities such as timber. Would
not payments stemming from oil and gas royalties and fees also be
subject to the ups and downs of markets?
Answer. Yes. In my testimony, I reviewed the history of the Forest
Service and BLM O&C revenue sharing programs to highlight the
challenges associated with volatility and to help provide information
that could be useful in crafting a long-term solution.
The boom and bust cycles inherent to commodity markets suggests
several things: returning to revenue sharing as the basis for providing
compensation for non-taxable federal lands will result in lower
payments for most communities relative to SRS, that compensation to
individual counties will vary dramatically in amount (meaning payments
are inequitable for the purpose of tax compensation), and that payments
will be highly uncertain from year to year.
Revenue sharing from oil and natural gas bonus payments, rents, and
royalties will face similar challenges associated with timber revenue
sharing payments. The testimony does not exclude these revenue sources
from scrutiny, or single out timber.
Question 4. How do higher taxes and fees on natural resources such
as oil and gas bring jobs back to counties rich with timber resources?
Answer. We recommend that the best way federal land compensation
programs can aid economic development in rural communities is to
provide stable, predictable payments as compensation for non-taxable
federal lands.
We do not make any recommendations to how the programs should be
funded. That is for Congress to determine.
Question 5. What would be the economic impact of higher taxes,
fees, and royalties for county governments where oil and gas is
produced?
Answer. The purpose of the hearing was to examine the options and
challenges related to possible reauthorization and reform of two
payment programs for local governments-the recently expired Secure
Rural Schools and Community Self-Determination Act and the Payment in
Lieu of Taxes.
We do not make any recommendations to how the programs should be
funded, that is for Congress to determine.
______
Responses of Jay O'Laughlin to Questions From Senator Murkowski
Question 1. Some have suggested that the expiration of the Secure
Rural Schools program is actually an opportunity to experiment with
alternative governance arrangements for national forest system lands. I
understand that you have studied the state trust land model and believe
it can be adapted successfully for national forest system lands.
Can you elaborate on how the state trust land model can be adapted
for national forest system lands?
Answer. It is my privilege to do so. Our nation's oldest, most
durable resource management model is the trust concept applied to
managing lands granted at statehood to support public schools and other
public institutions. The trust model is used by 22 states to manage 135
million acres of land and creates cash flows of billions of dollars for
trust beneficiaries, primarily public schools. The trust model is based
on principles of clarity, accountability, enforceability, perpetuity,
and prudence. Thus trust land management is capable of attaining
sustainable resource management on public lands, and likely more
capable than the hodgepodge of overlapping statutory mandates,
administrative regulations, and case law precedents that characterize
the current situation.
Of the five trust principles, only enforceability is evident on
National Forest System (NFS) timberlands. As a result of extensive
litigation, mostly regarding procedural failure rather than substantive
environmental quality issues, federal courts have become de facto land
and resource managers. As contrasted with the trust principles, NFS
objectives are unclear, managers are generally unaccountable for their
actions, at least 65 million acres of NFS timberlands are in a
condition that cannot be perpetuated (i.e., an unsustainable condition
due to excessive fuel loads), and the decision process is imprudent
because the National Forest Management Act (NFMA) relieves the U.S.
Forest Service (USFS) from having to employ efficiency guidelines that
ordinary businesses follow.
Trust settlor and trust components.--The creator of a trust is
called the settlor. For a land management trust on NFS timberlands
Congress would be the settlor. Trust components are briefly described
as follows. The trust corpus is a body of assets placed under trust
management, in this case, timberlands. The settlor creates a mission
statement defining land and resource management objectives, identifies
the trust beneficiaries, and appoints a board of trustees to set
policies and oversee trust land managers, who presumably would be
federal agency personnel. In essence, the lands in the trust are
managed for the beneficiaries rather than ``the public'' and the
trustees have a fiduciary obligation to act with undivided loyalty to
the beneficiaries.
Funding the trust.--To make the trust work, funding mechanisms are
needed that promote prudent businesslike management of the trust's
revenue-producing assets. Eventually a timberland management trust
could become self-sustaining if it had a sufficient amount of
timberlands. Given the current county payment situation, some bridge
funding would be needed until revenues begin to flow into the trust
fund accounts. To be sustainable the trust must be economically viable
and able to provide outputs of goods and services consistent with the
trust mission as well as perpetuate and sustain the trust assets.
Biodiversity considerations.--Several provisions of federal laws
that do not apply to state trust lands must be addressed to adapt the
trust model to NFS lands. Foremost among them is the NFMA mandate to
provide a diversity of plant and animal species. As USFS Chief Emeritus
Jack Ward Thomas once pointed out in the context of northern spotted
owl conservation, the NFMA diversity mandate is more difficult for the
USFS than meeting the requirements of individual species protected by
the Endangered Species Act. The trust model can be adapted to include
species diversity as a trust mission, and assets and cash flows from
them can be dedicated for that purpose in a biodiversity trust fund
account.
Valles Caldera Trust.--Application of the trust model to NFS lands
is not novel. Some NFS lands in New Mexico that have been managed since
2000 as the Valles Caldera Trust, a national preserve. Its mission,
however, is as vague as that of the NFS: protect and preserve the
scientific, scenic, geologic, watershed, fish, wildlife, historic,
cultural, and recreational values of the lands and to provide for
multiple use and the sustained yield of renewable resources. Although
it was designed as a revenue-producing trust with a self-sufficiency
goal, it is proving impossible to meet because the resource base is not
substantial enough.
Mission statement.--State trust lands have more precisely defined
missions than the Valles Caldera Trust. For example, as per the Idaho
Constitution, the lands granted from the public domain at statehood
must provide ``maximum long-term financial return'' for trust
beneficiaries, mostly the public schools. However, eight other public
institution beneficiaries also receive monies placed into their trust
fund accounts, including the University of Idaho. The trust settlor
(i.e., Congress) could dedicate some of the public lands trust assets
to generate monies for a biodiversity trust fund, and wildlife
advocates could be represented on the board of trustees to ensure that
the trust assets are used prudently and the revenue-generating capacity
is perpetuated. Other social concerns such as recreation opportunities
could be similarly included in the trust's organizational structure
with its own trust fund account. So, too, could local government
officials who have come to rely on federal payments as compensation for
not taxing federal lands.
Collaborative decision-making.--The current NFS governance system
works best when citizen interest groups collaborate among themselves
and recommend actions to the land managers. In theory this reduces
litigation over project proposals, but it is slow and not without its
critics. The current model stops short of power-sharing between
interest groups and managers, which I view as a flaw that probably
cannot be remedied under current laws and regulations. Under the trust
model, a local collaborative management group could be created to not
only work with and advise the trust land manager, but given power to
make decisions with the manager or otherwise hold managers accountable
for not implementing the group's recommendations. What about national
interests? It is debatable whether there is such a thing as a national
interest that is not present in an inclusive group of local interests.
But if there is, then the national interest could be represented on the
board of trustees, rather than the local collaborative group.
Question 2. You stated in your testimony that in your view we could
sustainably harvest enough timber from national forest lands to provide
revenues equivalent to SRS payments. This conflicts with the testimony
of Chief Tidwell of the Forest Service, who stated that the Forest
Service would need to cut 16.2 billion board feet to meet the SRS
payments and that this would be virtually impossible to accomplish.
Do you agree with the Forest Service that they would need to cut
16.2 billion board feet provide to revenues equivalent to SRS payments?
Answer. No, I do not agree with that statement. Revenues are a
function of price as well as quantity. Timber price is determined by
many things, including market demand, timber quality, and contract
stipulations timber purchasers must follow that add costs to their
operations and reduce the price they are willing to pay for timber.
Market demand is beyond the control of the USFS, but the agency can
change the quality of timber sale offerings and the administrative
rules for timber sales.
How much timber is needed, and at what price, to provide revenues
equivalent to SRS payments? In 2009, SRS payments peaked at $438
million. With the 25% revenue- sharing policy that has been in place
since 1908, revenues of more than $1.7 billion would be needed to
generate SRS payments. If it would take 16.2 billion board feet (BBF)
to generate $1.75 billion in gross revenues, then the average timber
price is calculated as $108 per thousand board feet (MBF). The question
now can be reframed: Is $108/MBF an accurate reflection of the value of
national forest timber? Not necessarily. It could be higher, or it
could be lower. In 2011 and 2012 the average price for NFS timber
harvested was $53/MBF and $55/MBF, respectively. By comparison, the
price for timber sold from Idaho's state trust lands averaged $200/MBF
in 2012; in Washington state, $330/MBF in 2011, and an average of $300/
MBF over a ten-year period from 2001-2011.
Question 2a. Please describe what a sustainable timber program on
national forest system lands would look like that would provide
revenues equivalent to SRS payments. What quantity of timber does this
represent?
Answer. During several years in the late 1980s, national forest
timber sales were as high as 12 billion board feet (BBF). Some analysts
would argue that 12 BBF/year is sustainable; if sold at an average of
$142/MBF then the 25% revenue-sharing policy would provide monies
equivalent to SRS payments at their peak level. Now consider that if
the Forest Service would harvest its self-determined Allowable Sale
Quantity (ASQ) of approximately 6 BBF/year at an average price of $292/
MBF, that would provide for peak SRS payments.
Is 6 BBF/year sustainable? By definition, the ASQ can be considered
sustainable, at least in the biophysical sense. When the USFS was
harvesting 12 BBF/year in the late 1980s, that was equivalent to only
about half of the annual growth increment. If the entire annual growth
increment were harvested during a year, the volume of timber in the
forest would be the same at the end of the year as it was at the
beginning. So even at 12 BBF/year, the timber harvest level was
biophysically sustainable, and forest growing stock was increased by a
large increment each year. With timber sales currently at 2.5 BBF/year,
a very large increment is added each year. As a result forests are
overstocked and trees struggle to compete for the limiting factor on
each forest site-usually water in the Interior West and nutrients or
sunlight elsewhere-and annual tree mortality has been increasing in
every inventory period since the timber sale program began to wind down
rapidly starting in 1990.
Sustainable forest management must be economically viable and
socially acceptable as well as biophysically feasible. According to
deceased Congressional Research Service analyst and forester Robert
Wolf, in the late 1980s the USFS timber sale program had not paid its
own way in any single year since the agency was created, despite USFS
claims that the program was profitable. Wolf fixed the blame on a USFS
failure to fully account for program costs.\1\ Since then timber sale
volumes have declined, while procedural requirements have not, so costs
are likely even higher per unit of timber sold. However, the main
reason the federal timber sale program now struggles to produce 2.5
BBF/year instead of 12 BBF/year is social acceptability. Segments of
society have made it clear that they wanted timber sales reduced, if
not eliminated, and when they go to court to enjoin a proposed USFS
timber sale project, they often are successful.
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\1\ Wolf, R.E. 1989. National Forest timber sales and the legacy of
Gifford Pinchot: Managing a forest and making it pay. University of
Colorado Law Review 60: 1037-1078.
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Responses of Jay O'Laughlin to Questions From Senator Barrasso
Question 1. Dr. O'Laughlin, the U.S. Forest Service believes that
increasing timber production from our forests to provide revenues
equivalent to SRS payments is basically impossible. Do you agree with
the Forest Service that this is next to impossible?
Answer. I would stop short of agreeing that it is impossible and
say instead it is highly unlikely, mainly because of the current set of
rules the agency must follow. These complicated rules test managers'
patience as well as their ability to make scarce budget resources do
everything that laws and regulations require. The USFS spends half or
more of its land management budget on planning and environmental
analysis documents that are often successfully litigated for procedural
failing. It may be time to change the rules, as several western states,
specifically Utah and Idaho, are formally calling for a change of
ownership. While those calls are being tested in legal venues, some
rule changes could be tested on the land. The state trust land
management model can be implemented on lands that remain in federal
ownership. This is not a novel idea, as some NFS lands in New Mexico
have been managed as the Valles Caldera Trust since 2000.
If the ASQ were harvested, what would the price need to be? Putting
aside planning, analysis, and administrative costs for the moment, let
us assume that the agency has sufficient resources to cut as much
timber as it wanted to. The Allowable Sale Quantity (ASQ) concept sets
a ceiling on what managers feel is a sustainable level of timber
harvest.\2\ The current ASQ across all NFS lands is about 6 BBF/year.
If that quantity of timber was sold at an average price of $292/MBF,
then the USFS would have gross revenues equivalent to SRS payments at
their highest level. The current price is an average of $54/MBF.
Perhaps Congress should consider what additional resources the agency
needs to harvest the ASQ, which is about 2.4 times its current harvest
level of 2.5 BBF/year, and require adjustments in agency practices so
that higher quality timber could be sold under less onerous rules that
would attract higher prices for sales. Some administrative rules would
likely have to be changed to do that, but I do not understand
procedural and contractual details well enough to make a
recommendation. However, I do believe that Congress could improve the
current situation and make land and resource management plans more
meaningful by setting the ASQ as a target, not a ceiling, and
specifying how the ASQ should be determined so that it is sustainable.
If a land and resource management plan fails to do that, it is in my
opinion not a very useful plan.
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\2\ Brown, G., J. O'Laughlin, and C.C. Harris. 1993. Allowable sale
quantity (ASQ) of timber as a focal point in national forest
management. Natural Resources Journal 33(3): 569-594.
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Question 2. Would linking timber management to revenue generation
lead to unsustainable logging?
Answer. No. The trust model used by the states to manage lands
granted at statehood for supporting public education generally has a
revenue- generating mission objective. If the mission is for long-term
revenue generation, as in Idaho, then the trust land manager must
protect and perpetuate the sustained-yield capacity of the land or be
in violation of the long-term revenue-production mandate. My
observations are that state trust lands in Idaho, Montana, and
Washington are managed sustainably under a revenue-production mission
objective. I suggest some pilot projects on federal lands to test this
question as a working hypothesis. Then arguments could be based on
evidence rather than speculation.
What is meant by sustainable logging? Logging is a forest
management tool, and sustainable forest management must be
biophysically feasible, economically viable, and socially acceptable.
There are some who will argue that state trust land timber harvests are
not sustainable, and that the current harvest of 2.5 BBF/year on
national forests is unsustainable. Others can be expected to argue that
state trust lands are managed sustainably. And some might even argue
that the 12 BBF/year harvests of the late 1980s on national forests
were sustainable. The NFMA does not require the USFS to practice
sustainable forest management, but perhaps it should. A starting point
would be revisiting the conditions under which timber harvest is
permissible, and the NFMA partially addresses that question by
restricting harvests to ``mature trees'' as defined by the non-economic
criterion of culmination of mean annual increment, which falls at a
much older age than the cutting age of forests managed for revenue
production. Third-party certification of sustainable forest management
has been tested on NFS lands. Whether certification should be a
requirement under the current system has been debated and the answer
was no. Although certification is costly, it has public relations value
and could be a useful approach to test as a feature of trust land
management pilot projects.
Biophysical feasibility--The annual forest growth on all NFS
timberlands is about 6.5 billion cubic feet, or roughly 32 BBF, with
annual mortality representing about 11 BBF. That means if the
centuries-old sustained-yield rule of thumb - don't cut more in a year
than the forest grows-were the guideline, then the national forests
could provide a sustainable timber harvest of 32 BBF based on gross
growth or 22 BBF/year based on net growth. That means if 22 BBF were
harvested in a year, there would be the same amount of live green
forest growing stock at the end of the year as at the beginning. A
legitimate set of questions that I do not believe have ever been asked
would be, what is the appropriate growing stock volume for NFS
timberlands, and what should the annual net growth increment be? (After
gross growth has been reduced to account for mortality and removals by
timber harvest or other forest restoration activities.) Determining a
sustainable ASQ implicitly relies on replies to these questions.
Economic viability--Given the high administrative planning and
environmental analysis costs incurred by the USFS to comply with NFMA
and the National Environmental Policy Act (NEPA)-some analysts estimate
it to be more than half the agency's land management budget-then the
timber sale program probably is not economically viable. As noted in
the reply to an earlier question, the USFS has never been able to
demonstrate that the timber sale program was profitable.
Social acceptability--Although society has not deliberated the
question of what a sustainable NFS timber harvest level would be,
segments of society have used planning and environmental laws to sue
the Forest Service seeking to stop timber sales. Courts have often
interpreted the laws in the plaintiff's favor.
Question 3. In your testimony you talked about changing the rules
as a way to increase timber production while also addressing our
wildfire/forest health problem. Will you further explain what rules and
how they must be changed?
Answer. Yes, gladly. The question addresses two parts of what I
described as the triple-win from active forest management: improved
conditions and useful products. The third part is creation of family-
wage employment. Before responding directly to the question of rule
changes that could advance the triple-win concept, a brief digression
provides a description of and a prescription for the wildfire/ forest
health problem that may provide useful context.
Wildfire/forest health problem. Western forests evolved in the
presence of fire, thus are what ecologists call fire-adapted. By
excluding fire from forests for a century through very effective fire
suppression activities, the fuel complex has been altered. Fuel loads
are at unprecedented high levels and wildfires have become larger and
less controllable than at any time in a century. Ways to improve the
situation are well known: Either return fire to the landscape at
something approximating the historic fire regime, or where that is too
dangerous or not socially acceptable, use a fire surrogate to reduce
hazardous levels of fuel-i.e., remove woody vegetation using logging
equipment. Even if it is desirable to restore fire everywhere, the USFS
points out that at least 12 million acres need mechanical treatments,
i.e., logging, to remove vegetation before restoring fire would be
considered reasonably safe. The agency is doing about 250,000 acres of
mechanical treatments per year and producing 2.5 BBF/year. At that rate
it will take 48 years to do the mechanical treatment part of
restoration, and because vegetation grows back the mechanical
treatments will need to be repeated to keep fuel loads below hazardous
levels if fire does not return as expected soon after fuel treatments.
If the ASQ of 6 BBF/year were harvested only from these 12 million
acres of lands needing mechanical treatment, then the program of
restoration work would take 20 years instead of 48.
The trust model--It seems foolish to wait any longer to begin a
program of accelerated restoration; however, the federal budget
situation is tricky, to put it mildly, and sustainable forest
management must be economically viable. The idea that revenues from
timber sales should be dedicated to fund forest restoration work may be
a heretical non-starter for some people, but those with open minds
should consider that the principles underpinning the trust land
management model do not necessarily mean that linking timber revenues
to specific programs, whether it be county payments or forest
restoration work, creates an unsustainable situation. Based on her
important and insightful book on State Trust Lands, Sally Fairfax,
professor emeritus of the University of California-Berkeley, concluded
that the trust land management model was more likely to attain
sustainability than the current system.
Rule changes--If trust land managers had to deal with all the same
rules that NFS managers must comply with today, society should not
expect outcomes that are much different than what the NFS lands are
currently providing for society. I would describe that as overstocked
forests waiting to burn in unprecedented large and uncontrollable
wildfires, like those in 2000, 2006, 2007, and 2012, each successive
year topping the previous record of acreage burned in the west while
the average number of wildfires per year has remained relatively
constant for the past three decades. Tens of millions of timberlands
are in an unsustainable condition and managed passively rather than
actively.
Redo the NFMA statute. The USFS has tinkered with NFMA regulations
numerous times and still failed to provide a sustained yield of
multiple goods and services while forest conditions have worsened. The
NFMA diverts scarce resources to creating planning documents that are
chiefly useful for the maps that designate dominant-use areas where
timber can be harvested and motorized recreational vehicles can go. Pay
careful attention to the NFMA diversity mandate. Redefining the ASQ
mandate and a new set of criteria describing where and when timber can
be harvested would help.
Put land managers in charge of land management, not courts. These
changes would help: Reduce the need for land managers to shuffle papers
in the office and get them out on the land where they can improve
landscape resiliency by removing hazardous fuels. Healthy Forest
Restoration Act mechanisms should be used more widely.
NEPA requirements are burdensome and expensive. Administrative
approaches to NEPA reform have not made much difference. Some
instructions from Congress could help. Create categorical exclusions
for fuel treatment projects designed to improve wildfire resiliency
across large landscapes. If there are to be such things as NFMA land
and resource management plans, exempt them from NEPA analysis. These
planning documents describe dominant use areas as guides to actions
across multi-million acre planning units, not decision documents for
taking action. Such actions are proposed in smaller-scale projects, but
wisdom currently emerging on NFS lands in South Dakota and Arizona is
that NEPA analysis needs to be done at the scale of hundreds of
thousands of acres, which is at least an order of magnitude greater
than more customary project size of several thousand acres. The
wildfire/forest health problems are large-scale and so must be the
creative approaches to improve problem situations.
Conclusion--I appreciate the senators' questions and the
opportunity to respond to them thoughtfully. I hope some of these ideas
will improve the way NFS lands are managed. That is a common interest
shared by citizens across the U.S., but especially in the western
states where the NFS dominates the landscape, and in no other state as
much as Idaho. Trust land management works, and today's managers are
just as innovative as those who initiated the federal land management
systems. If managers were freed from expensive administrative burden
they would be able to demonstrate the good things they are capable of
doing. Try some pilot projects with the trust model, and do it at a
large scale. A ranger district here and there will not be enough, as
the Valles Caldera Trust demonstrates. A four million acre area, such
as the Clearwater-Nez Perce NF planning unit in north-central Idaho, or
the Boise-Payette-Sawtooth NF unit in southern Idaho, is the right
scale. So are the Fremont-Winema, Okanogan-Wenatchee, Tongass, Medicine
Bow-Routt, and Uinta-Wasatch-Cache. And there are many others.
______
Responses of Paul Pearce to Questions From Senator Murkowski
Question 1. Do you agree with the assertion that Secure Rural
Schools payments have promoted economic diversification? Has recreation
or other public land uses been able to replace the loss of the timber
economy in your experience?
Answer. We do not believe that SRS payments have promoted economic
diversification in most of the counties receiving it. Economic
diversity requires long range planning and land base available for
infrastructure. Many of these counties are just holding on and look to
the forests to be the economic engines they were intended to be and
once were. Sustainable forest management is the only way they will
achieve economic diversification
We do think that projects under Title ll have contributed to the
economy of local communities. However they do not even scratch the
surface that is required to have healthy and resilient forests.
Recreation on the forest and tourism in general cannot replace the
economy that existed prior to the agencies decisions to stop managing
these lands. We say in Skamania County that when the Skamania Lodge was
built (private-county-federal partnership) that they eliminated family
wage jobs in the forest and created service wage jobs at the lodge.
Clearly this was backwards.
Question 2. You testified that although you and your organization
want to see more active management of the forests on federal lands you
also want to see secure rural schools payments continue as a bridge.
What kind of forest management reforms does your organization
support and want to see implemented in forests on federal lands? What
is your organization's definition of ``bridge'' funding? How many years
of secure rural schools payments are an adequate ``bridge'', when some
counties have received payments for more than two decades?
Answer. The counties did not make the decision to stop managing our
public lands. My organization has proposed, since its inception in the
late 90's, that we must restore the economic engine that these forests
represent. Our principals on what we need in forest management
legislation are attached to my written testimony and I repeat them
here;
Improving the efficiency for planning and implementation
will reduce total management costs and leverage funds to
accomplish more forest restoration.
An investment in forest health restoration, which is an
investment in rural economies, can save millions of dollars in
state and federal funds by creating jobs and avoiding costs
associated with wildfire suppression, social service programs
and unemployment benefits.
Efforts to accelerate the pace of forest health projects
must include watershed scale projects that provide for less
expensive and faster planning.
Partners in planning a forest health project should be able
to assume certain technical assistance roles in project
planning. State and tribal forestry departments can play a role
in project delivery. This could include parts or all of
restoration, forest health, silviculture and harvesting;
(application of Good Neighbor Authority).
Stewardship contracting should be extended and include the
requirement that Counties and Schools receive shared revenues
on the gross project value as is required on any other
receipts.
There should be the necessary authority to pursue markets
and investments to utilize forest restoration byproducts as
part of watershed level and larger forest health projects.
Allow third parties to pool funding and prepare the NEPA
review for watershed level and larger projects.
Increase involvement among environmentalists, forest
products industry, counties and the federal land managers to
create the agreement for NEPA to be protected against appeals
and litigation.
The Healthy Forests Restoration Act, which passed Congress
overwhelmingly in 2002, should be applied more broadly.
Bridge funding should be continued until the Agencies meet their
obligations to these communities. As you're questioning of the Chief
proved, even with a specific forest plan, requiring specific
deliverable's, the Forest Service somehow falls short. Imagine that
same conversation over the nearly 20 years since the NW Forest Plans'
adoption, the deliverables of which have never been met on any forest
with the plans scope. We are absolutely prepared to work with congress
to end the senseless gridlock that has the land locked up. As Gifford
Pinchot promised ``with shared revenues no community will suffer for
hosting these lands'' which of course is no longer the case.
Responses of Paul Pearce to Questions From Senator Barrasso
Question 1. Do you see NEPA and other environmental laws as
impediments to active forest management in terms of forest restoration
and commercial timber production?
Answer. We believe that the use of Environmental Assessments' and
Categorical Excemptions's, as well as expanding the use of the Healthy
Forest Restoration Act are available now but are not used by the
Agencies even as they were envisioned in legislation.
Question 2. Do you and the Partnership for Rural America support
reform of NEPA and other environmental laws as part of an SRS
reauthorization?
Answer. We would be willing to engage with the committee in a
review of what is working and what is not, and we think we could be
very constructive in finding greater efficiencies while delivering
equal or better environmental analysis.
Under the ESA we would argue that US Fish & Wildlife should have to
do an all species evaluation when listing a species as threatened or
endangered. The current ``one species at a time'' approach is clearly
not good science.
We would also note that the USFW now has a new rule, which they
pushed through, which allows that on critical habitat designation they
never again have to do a full Environmental Impact Statement but
instead will only have to do an Environmental Assessment. If that
authority exists in rule making we would argue that the same could be
done for Forest restoration projects include commercial harvest.
Question 3. In your testimony, you highlighted the issue of
reauthorization of stewardship contracting authority and that it was
important to have a conversation about impact on revenue sharing before
it is reauthorized. Are you concerned that receipts from stewardship
contracting are not currently subject to be shared with counties?
Answer. My members are very concerned about stewardship contracting
with no receipts. The reason has a great deal to do with Congress
questioning the need for bridge funding or SRS and that Counties should
return to 25% receipt driven revenue sharing.
To have Congress say we should return to revenue sharing through
receipts while at the same time authorizing Stewardship Contracting
which allows the local District Ranger or Forest Supervisor to keep all
proceeds from the contract for ``projects'' on the forest is at best a
mixed message to these communities.
Question 4. Would your organization support a reauthorization of
stewardship contracting authority without addressing revenue sharing
with respect to stewardship contracts?
Answer. We are not in support at this time. My members are
concerned about actual costs and revenue sharing potential. This would
be facilitated by greater transparency--through the use of reporting by
the Forest Service of the monies or goods received for the contract and
the ``project'' costs associated with it. Currently in an actual timber
sale the Forest Service reports the ``profit'' from the sale after
reporting ``costs'' associated with it. This includes a line item for
infrastructure. Using the same reporting process might solve the issue
in that my members would then have the ability to assess the real
impacts of these contracts. There is a second concern that the Forest
Service will eventually be doing nothing but Stewardship Contracting
timber sales.
______
Responses of Ryan R. Yates to Questions From Senator Murkowski
Question 1. If mandatory spending for PILT ends and is not
continued and you once again become dependent on annual appropriations;
which program is more important to your organization and the counties:
PILT or Secure Rural School payments?
Answer. Funding for both the Payment in Lieu of Taxes program and
the Secure Rural Schools and Community Self-Determination Act reflect a
longstanding federal obligation to counties encumbered by the presence
of federal land within their jurisdictional boundaries. As both
programs are critically important to local governments-and
fundamentally different (in intent, application and regional impact)-
NACo is not in a position to pick and choose which Federal commitments
the government should honor.
NACo supports the full funding of the PILT program at its yearly
authorized level and supports legislative and/or administrative efforts
to modify the program to make payments to counties on a basis equitable
to both the federal and local taxpayer that are non-discriminatory in
nature.
Counties must share in the benefits of economic activity on public
lands through statutory formulas, which guarantee a percentage of all
gross receipts to be returned to the counties where the activity
occurs. NACo opposes any attempts to lessen the revenue sharing
receipts.
Question 2. Headquarters Economics proposed combining secure rural
schools and other revenue sharing with PILT as part of a single payment
that would be paid to counties. At the hearing you indicated that the
National Association of Counties does not support combining PILT with
SRS. Please explain why the National Association is opposed to
combining PILT and SRS into a single payment program. Does that
opposition extend to combining PILT with other revenue sharing
programs/activities (e.g. oil and gas production), why or why not?
Answer. As PILT is not a revenue sharing program, NACo opposes the
combination or consolidation of PILT with other federal resource based
revenue sharing programs. The basis for annual PILT payments is federal
ownership of lands that are not subject to local taxation.
Additionally, unlike most revenue sharing programs, PILT funds are used
by local governments as general fund dollars to be used for any
governmental purpose. Typically, revenue sharing program funds are
earmarked for a specific use tied to a resource activity (i.e. SRS
Title I funds can only be used for county road projects).
One of the primary reasons for the creation of the PILT program was
the passage of the Federal Land Policy and Management Act-which
specifically established that disposal of public lands would largely
cease. Annual PILT payments reflect the United States governments'
commitment to local governments to make payments in lieu of local
property taxes. If annual PILT payments are unable to be funded by
Congress, other options for the U.S government to consider could
include: 1) direct invoices from local governments based on actual
property tax rates, and 2) the disposal of federally owned property to
private ownership (which is subject to local property taxes)
The consolidation of PILT and other federal revenue sharing
programs would also politicize an otherwise apolitical and
straightforward program by tying resource extraction activities - which
have become politically contentious in recent years-to a tax
equivalency program.
Response of Ryan R. Yates to Question From Senator Manchin
Question 1. Like many of my colleagues, I understand the importance
of PILT and SRS to local and county governments in West Virginia and
across the United States.
Today the Committee has heard a number of proposals to reform both
programs.
I want to know what you, as a representative from the National
Association of Counties, think is the single most important reform
measure we can make in Congress to these programs.
Answer. In terms of the SRS program, the most important reform
would be to couple future forest payments to counties and active
natural resource management to provide for the stability and well-being
of forest counties and communities. NACo urges a new direction in the
management of our federal forests, for the very health of the forests
themselves, and for job opportunities and social and economic
sustainability in rural America.
While some form of ``bridge funding'' to maintain solvency in our
counties will be required, particularly given the dominance of federal
forest presence in many counties, it is essential that Congress mandate
active sustainable forest management to achieve necessary revenues (for
counties and the taxpayer) and resilient forest lands managed by the
United States government.
For the PILT program, NACo supports the elimination of population
caps from the formula. The use of population caps discriminates against
rural counties with small population and fails to accurately
demonstrate the actual population of people being served by the county
government.
Additionally, Congress should eliminate the use of ``prior-year
payment'' reductions from the formula. The government should not reduce
its tax obligation to county governments, solely because of other land
management revenue agreements between governments.
Responses of Ryan R. Yates to Questions From Senator Barrasso
Question 1. The National Association of Counties has stated in the
past that the federal government has failed to effectively manage our
federal lands. Does the National Association of Counties still believe
this is the case? If so, in what ways has the federal government failed
to effectively manage our federal lands?
Answer. Management activities on the USDA Forest Service 193
million acre estate have steadily declined over the past two decades.
Forest Service revenues from management activities (including grazing,
timber, minerals, recreation, power, and special-use permits) have
declined from total revenues of $1.385 billion in FY1990 to $186.4
million in FY2010.
Due to the agency's loss of productivity, Congress has had to make
mandatory payments to counties (via the Secure Rural Schools program)
in lieu of sharing revenue at a cost of roughly $350-500 million /
year. Additionally, local forest communities have suffered from steep
economic declines from the loss of resource-based employment which has
led to increases in unemployment rates, declines in state gross
domestic product, and in many cases-population reductions in rural
communities.
Additionally, NACo is concerned that while Congress has struggled
to manage the federal estate while meeting longstanding financial
obligations to states and counties, the government continues to seek to
enlarge the federal estate and limit public access and use through
special use designations.
NACo opposes federal land management agency actions that limit
access and multiple use of lands that otherwise would be available to
the public (i.e. defacto wilderness). NACo opposes Executive Branch
efforts to designate de facto wilderness, or federal restrictions not
explicitly enacted on use of public or private lands in proximity to a
designated wilderness or a Wilderness Study Area without congressional
approval. NACo supports amending the Antiquities Act to provide
transparency and accountability in the designation of national
monuments. Federal consultation with state, county, and tribal
governments should be required prior to the development and designation
of any national monument.
Question 2. Does NACo believe that the relationship between forest
management and revenue for counties creates a perverse incentive to
advocate for unsustainable logging on our public lands?
Answer. No. NACo maintains that Federal forest payments to counties
should be coupled with active natural resource management. NACo
supports the relationship between sustainable natural resource
management and the stability and well-being of forest counties and
communities.
Question 3. Does NACo support re-linking receipts and forest
management?
Answer. While counties are deeply grateful for the financial
lifeline of the Secure Rural Schools & Community Self-Determination Act
(SRS), NACo urges a new direction in management of our federal forests,
for the very health of the forests themselves, and for job
opportunities and social and economic sustainability. While some form
of ``bridge funding'' to maintain solvency in our counties will be
required, particularly given the dominance of federal forest presence
in many counties, it is essential that there be a new direction in
federal forest management.
Legislation that provides bridge funding to forested counties and
school districts while economic vitality is restored in these
communities is vitally important and essential. Also, for there to be
economic vitality, Congress must mandate active sustainable forest
management to achieve resilient forest lands managed by the United
States government.
Response of Ryan R. Yates to Question From Senator Heller
Question 1. In your oral testimony, you indicated that the National
Association of Counties would oppose the combining of the PILT and
Secure Rural Schools programs. Could you please elaborate on the
rationale behind NACo's position?
Answer. As PILT is not a revenue sharing program, NACo opposes the
combination or consolidation of PILT with other federal resource based
revenue sharing programs. The basis for annual PILT payments is federal
ownership of lands that are not subject to local taxation.
Additionally, unlike most revenue sharing programs, PILT funds are used
by local governments as general fund dollars to be used for any
governmental purpose. Typically, revenue sharing program funds are
earmarked for a specific use tied to a resource activity (i.e. SRS
Title I funds can only be used for county road projects).
One of the primary reasons for the creation of the PILT program was
the passage of the Federal Land Policy and Management Act-which
specifically established that disposal of public lands would largely
cease. Annual PILT payments reflect the United States governments'
commitment to local governments to make payments in lieu of local
property taxes. If annual PILT payments are unable to be funded by
congress, other options for the U.S government to consider could
include: 1) direct invoices from local governments based on actual
property tax rates, and 2) the disposal of federally owned property to
private ownership (which is subject to local property taxes)
The consolidation of PILT and other federal revenue sharing
programs would also politicize and otherwise apolitical and
straightforward program by tying resource extraction activities--which
have become politically contentious in recent years--to a tax
equivalency program.
______
Responses of Thomas Tidwell to Questions From Senator Wyden
Question 1. Thank you for showing your support at the hearing for
both Secure Rural Schools and for getting the timber cut up. I
understand your point that the Forest Service could not sell enough
timber today to replace County payments, and that is why I am
advocating for a two-pronged approach: a short-term extension of County
payments while we rejuvenate the Agencies' timber programs. In your
testimony, you pointed out that 16.8 billion board feet is the amount
of timber that would need to be sold today to fund County payments in
FY 2014. In the entire history of your Agency, has the Forest Service
ever sold in a single year that much timber? What is the most amount
oftimber the Forest Service has ever sold in a year? During the period
when the Agency was conducting its highest years of timber harvesting,
what was the average annual volume of timber offered for sale?
Answer. The agency sold 19.5 BBF (billion board feet) in 1969. 8
BBF ofthis amount was in one long term contract offering in Alaska.
Between 1970 and 1988 the average volume of timber offered for sale was
12.6 BBF and the average sold volume was 11.0 BBF.
Question 2. Chief Tidwell, I appreciate your sharing my commitment
to get the timber cut up. I know there are a number of ideas
circulating about ways to accomplish that, but one idea that seems like
a no brainer to me involves the Forest Service's appeals and objection
process. Over a year ago, you started to update the Agency's
regulations concerning the use of its pre- decisional objection
process. When will you finalize these regulations, enabling restoration
projects to be expedited and the role of public involvement to be
firmed up?
Answer. The final rule was published in the Federal Register on
March 27, 2013 at https://www.federalregister.gov./articles/2013/03/27/
2013-06857/project-level-predecisional-administrative-review-process.
Question 3. Dr. Jay 0'Laughlin, a witness from the second panel,
testified that placing National Forests lands into trusts could be an
effective way to achieve more harvests and revenues, citing the Valles
Caldera as an example. I understand the trust was created from a
private ranch and was created to protect the ranch and be self-
sustaining. Is the Valles Caldera the only example of the Forest
Service operating its lands through a trust? For what purposes was the
trust created and how does it differ from the purposes of state trust
lands and other Forest Service lands?
Answer. The Valles Caldera Preservation Act provided for the
acquisition of the 88,900 acre Baca Ranch in the Jemez Mountains ofNew
Mexico into the National Forest System. The purpose of the Valles
Caldera National Preserve (VCNP) is to protect and preserve the
scientific, scenic, geologic, and other resource values of the
Preserve, and to provide for multiple use and sustained yield of
renewable resources and. to be a working ranch. It was established as a
demonstration area for an experimental management regime, which
incorporates both public and private administration elements. The Act
also established the Valles Caldera Trust (VCT) to provide
administrative and management services, establish and implement
policies, to receive and collect funds from private and public sources,
and to cooperate with other Federal, State, Tribal, and local
governmental units. The VCT provides administrative and management
services for the VCNP. The VCT is managed by a Board of Trustees that
consists of the Forest Supervisor of the Santa Fe NF, the
Superintendent of Bandelier National Monument, and seven presidential
appointees. This is the only such trust within the National Forest
System.
VCNP differs from the purposes of other National Forest System
lands in that it is managed by the Valles Caldera Trust and overseen by
a Board of Trustees. In addition, the Valles Caldera Preservation Act
has some specific provisions for the VCNP to continue as a working
ranch and preserve the unique values of the area. Most significantly,
the Act requires that the VCT work toward the goal of financial self-
sustainability within 15 years after the date of acquisition (e.g.
sufficiency by 2015) or become part of the National Forest System.
In general, state trust lands are required in state constitutions
to be managed for the sole purpose of generating revenue for public
schools and other public institutions in western states. These state
trust lands have a very different mandate than National Forest System
lands, which are managed for multiple uses and sustained natural
resource benefits such as water quality, forest health, and wildlife
habitat.
Question 4. Has the Valles Caldera National Preserve been
successful at producing enough revenues to offset its need for
appropriation-as was originally intended?
Answer. No-while revenues have increased since creation of the
Preserve, they do not complet ly offset the need for appropriations.
The table below summarizes total appropriations and revenues generated
for Fiscal Years 2001-2012
In addition, the Santa Fe National Forest provides additional
financial support and donates work to Valles Caldera for a variety of
activities and services, outside of the direct appropriation from
Congress. Some of these activities include fire prevention,
suppression, post fire rehabilitation, one half of all law enforcement
costs, budget and finance related services, payments, accounting
adjustments, travel, internal audits, acquisition, and grants and
agreements.
The VCT is making measured progress toward the attainment of the
goals put forward in the Valles Caldera Preservation Act of2000. They
have either met, exceeded, or are making strides toward all the goals
articulated in the enabling legislation-including the financial self-
sufficiency. To date the VCT is recovering 30 percent of its total
operating costs through fees and donations. In addition, 50 percent of
the ecological restoration costs are recovered through the
Collaborative Forest Landscape Restoration program which is funded by
Congressional appropriations specifically for restoring forest
ecosystems on National Forest System lands nationwide. Much of the
remaining costs for restorations have been recovered through grants
secured through partnerships and a host of other universities,
agencies, and organizations. The recreation programs are either
profitable, breaking even or are closing the gap.
Question 5. What are the total collections ofthe Forest Service for
each of the last 5 fiscal years? For each fiscal year, please by type
of receipt (timber, recreation, etc.) and state.
Answer. As was agreed to by the Committee staff, since the amount
of data requested here is very large, it is most efficient to use the
website at www.fs.usda.gov/pts. Once at the Secure Rural Schools
website, go to the ``related links'' on the right side, and choose
``annual payment information.'' This will take you to a listing of the
many reports available; scroll down until you find the ASR 13-2 Report
for each year that you are interested in the receipts.
Responses of Thomas Tidwell to Questions From Senator Murkowski
Question 1. I have heard from counties and other stakeholders all
over the country that we need to more actively manage our forests both
for forest health and for commercial timber production. Yet even where
there is stakeholder agreement on what needs to be done, the Forest
Service is not getting the job done. Can you explain why the Forest
Service is having such a difficult time increasing the work being done
on our national forests both in terms of forest restoration and
commercial timber production? What role does litigation and
environmental compliance requirements play?
Answer. We agree that more restoration work needs to be done on the
national forests. Over the last few years the Forest Service has
increased timber volume sold, achieving the target of 2.64 billion
board feet in 2012. The FS exceeded a number of restoration targets in
2012, such as moving 9 watersheds to an improved condition class
(target was 5 watersheds); decommissioning 2,103 miles of road (target
was 2,028 miles); and restoring/enhancing 3,704 miles of stream habitat
(target was 2,670 miles).
The FS continues to explore new and existing tools to become more
efficient; collaboration is helping. Across the country a multitude of
collaborative efforts are reducing polarization and leading to
increased outputs. The Forest Service continues to reach out to groups
that find themselves hesitant to collaborate in an effort to reach
common goals.
Litigation and environmental compliance requirements affect the
quality and quantity of our work. Meeting environmental compliance
requirements adds value to our decision making and public involvement,
but it also adds time. We are working to make these processes more
efficient and effective.
Litigation affects the work in two ways-projects are put on hold
either under court order or under the threat of potential litigation.
Approximately two percent of the decisions made each year are brought
to litigation. While this is a small percentage, the threat of
potential litigation often adds to the workload by increasing the data
collected and analyzed in order to lessen legal vulnerability.
Other factors are involved in the amount of restoration work that
can be done. Staffing within the agency has shifted to reflect an
increased focus on fire. Since 1998 fire staffing within the Forest
Service has increased 110 percent. Over the same time period, National
Forest System staffing has decreased by 35 percent and Forest
Management staffing has decreased by 49 percent.
Fire transfers occur when the agency has exhausted all available
funding from the Suppression and FLAME accounts. Six times from FY 2002
to FY 2012, the Forest Service has made fire transfers from
discretionary, mandatory, and permanent accounts to pay for fire
suppression costs in amounts ranging from $100,000,000 in FY 2007 to
$999,000,000 in FY 2002, and totaling approximately 2.7 billion. Of
that total, $2.3 billion was eventually repaid but the transfers still
led to disruptions within affected Forest Service programs. In FY 2012,
the Forest Service transferred $440 million to the fire suppression
account for emergency fire suppression due to severe burning conditions
and increasing fire suppression costs. Projects at all levels of the
organization were deferred or cancelled as a result of the transfers.
Each time the agency transfers money out of accounts to pay for
fire suppression there are significant and lasting impacts across the
entire Forest Service. Not only do these impacts affect the ability of
the Forest Service to conduct stewardship work on national forests,
they also affect our partners, including local governments and tribes.
Question 2. You testified at the hearing that the Forest Service
would need to cut 16.2 billion board feet a year to provide the
revenues needed to meet the current Secure Rural Schools payment
levels. It is my understanding that to reach that number the Forest
Service included prices for personal use firewood, sale of decked logs
from road construction, and other nonconvertible products like
Christmas trees, floral greens, and other things not really considered
timber. What sale level would be required if your volume accomplishment
reporting only counted commercially valuable sawtimber, pulpwood and
biomass where markets exist?
Answer. The calculation of 16.2 billion board feet did not include
the value of nonconvertible products, such as Christmas trees, floral
greens, and other things not really considered timber. It did include
the value of firewood, posts, poles, non-sawtimber, and ties in the
current program. If only the value of sawtimber, pulpwood and biomass
were used in the calculation for the additional volume needed to cover
the payment, then an additional 11.3 billion board feet would need to
be added to the current program for a total of 13.9 billion board feet.
Question 3. I am told that the Forest Service spends $100 or more
per million board feet (mbf) to prepare and implement a timber sale
while a state sale on average costs only $25 per mbf. Why do federal
timber sales cost so much more?
Answer. Currently, the Forest Service national average for
preparing and implementing (administering) timber sales is about $90
per MBF. This varies considerably by region from a low of $55 per MBF
to just under $180 per MBF. These costs include all timber sale related
costs at the regional, forest and district offices. It also includes
the cost of surveys, inventories, environmental analysis and disclosure
(NEPA), sale layout, volume and value determination, contract
preparation and award, and sale administration. In addition, costs
associated with appeals and litigation, rework of timber sales, and
administration of personal use for firewood and special forest products
are included.
The statutes and regulations that govern state timber sales are
different than those for federal timber sales. Most states are mandated
to generate revenue for schools from their state trust lands. This
usually results in states selecting the larger and more valuable trees
to harvest resulting in higher volumes per acre and lower unit costs.
Federal timber sales are integrated with other resource objectives
under their multiple use mandates.
The agency has been implementing measures to reduce the cost of
preparing and implementing timber sales. The unit costs per MBF have
decreased by approximately 23 percent since 1998 when adjusted for
inflation.
Response of Thomas Tidwell to Question From Senator Manchin
My state of West Virginia is home to about 1 million acres of SRS
eligible land and 1.2 million acres of PILT eligible land.
In 2012 alone, West Virginia received nearly $3 million in PILT
payments and more than $1.7 million in SRS payments.
West Virginia is also a largely rural state and the expiration of
the SRS program will have a greater impact on us than it will more
populated states.
Question 1. In the second panel today, we will hear from Mark
Haggerty with Headwaters Economics. Are you familiar with his proposals
for a single payment model and his proposal to increase the population
limit for rural counties? If so, what is your opinion on these
proposals?
Answer. The United States Forest Service has not analyzed the
Headwaters proposal and does not have an opinion at this time.
Responses of Thomas Tidwell to Questions From Senator Barrasso
Question 1. The Forest Service has stated that IRR reduces unit
costs. What evidence can you provide the Committee to verify the
statement particularity as it relates to timber production?
Answer. The Forest Service is evaluating the operational
efficiencies of IRR in several ways: Regional Annual Reports which
include case studies from each region documenting accomplishments,
successes and challenges; reviewing performance measures to identify or
develop those that help measure restoration outcomes; and contracting a
third party evaluation of IRR. The Agency has initiated a third-party
monitoring of IRR with Colorado State University and the University of
Oregon; it will begin June 2013 and be completed by March 2015.
IRR is a budget consolidation tool designed to help promote
restoration activities on NFS lands. IRR aligns funding with program
and policy direction from the Secretary of Agriculture reinforcing the
agency's commitment to accomplish work more efficiently through
collaboration and an ``All Lands'' restoration approach. IRR
facilitates and supports an integrated approach to land management that
maintains, enhances, or restores watersheds at the landscape level to
improve their resilience. Through this alignment of funding, the Forest
Service expects to gain administrative efficiencies which will increase
our ability to accomplish more on-the-ground work, enhance outcomes,
and contribute, enhance, and maintain restoration related jobs with
IRR.
IRR is only a part of our effort to gain efficiencies. We are
pursuing other avenues as well, such as by gaining efficiencies through
our NEPA and timber sale preparation program. When adjusted to
inflation, funding has been reduced by 185 million dollars since 1998
and staffhas been reduced by 49 percent. But during the same time we've
had to reduce our unit costs for a thousand board feet by 23 percent.
We want to be able to continue to do that work and IRR could help the
Forest Service to gain more efficiencies.
Question 2a. Region 1 has seen a higher amount of collaboration
efforts that you spoke about at the hearing. The region also enjoys
Stewardship Contracting, and is an IRR pilot region with several CFLRA
pilot projects. Can you explain to me why nearly half the timber volume
they offered for sale was enjoined in 2012?
Answer. There are a handful of environmental groups that constitute
almost all of the recent litigation in Region 1. These groups do not
appear to have an interest in collaborating. The current and past
Regional Forester and other Forest Service personnel have reached out
to several of these groups. The response is that they do not support
commercial timber harvest on National Forest lands, and suggest that
commercial harvest activities should be separated from the activities
they support, e.g., road decommissioning, fish passage work- even in a
stewardship contract where the sale of timber would likely increase
those restoration activities with goods for services, and/or through
the use of retained receipts.
Question 2b. With Stewardship Contracting, collaboration efforts,
and an IRR pilot, why does Region 1 have the lowest attainment of
timber output in the lower 48 among Forest Service regions?
Answer. The region has prepared sufficient volume for offer, but
litigation is currently affecting the Region's ability to meet timber
volume sold targets. Seven projects have been the subject of litigation
and the Region is in the process of working with the respective
Forests, OGC, DOJ and the Washington Office to move forward with
advertising, bid opening and award.
Question 2c. Why do they have the highest unit cost per unit of
wood produced?
Answer. If the Region had achieved its target, unit costs would be
comparable to neighboring regions; however, it was unable to sell
everything it had prepared due to litigation. The overall expenditure
for planning/NEPA is estimated at approximately 60-70 percent of the
funds allocated for the program. Because of the litigious environment a
large amount oftime is spent in analysis and documentation in order to
prevail in legal challenges, even prevailing on 11 out of 12 issues can
still result in injunctive relief or further delays, as evidenced in a
recent decision (Colt Summit). The remaining 30 percent of funds covers
sale preparation, sale administration, etc.
The region has gained efficiencies through the use of the timber
sale strike teams for which unit costs are nationally competitive. In
addition, in order to increase success in litigation, the region has
implemented a host ofNEPA efficiency initiatives.
Question 3. With more of the timber sale program being sold through
Stewardship contracts there is less revenue being returned to the
counties where it was generated. Understanding from the hearing that
every little bit of funding helps counties, and with an eye towards
renewing stewardship contracting, how do you see the relationship
between Federal lands and their neighboring units oflocal government
evolving under Stewardship contracting?
Answer. Stewardship contracting allows the receipts from the timber
to pay for restoration activities in the sale area, generating more
work on the ground and providing more local jobs. The Forest Service is
committed to increasing the pace of restoration and job creation, with
available resources. The Collaborative Forest Landscape Restoration
Program, which relies heavily on stewardship contracting, created and
maintained an estimated 3,375 part- and full-time jobs during 2011 and
4,574 part- and full-ime jobs during 2012. The FY 2014 budget proposes
to achieve an output of2.38 billion board feet of timber volume sold,
2,000 miles of road decommissioned, and 3,100 miles of stream restored
predominantly in timber dependent counties. The Forest Service is also
creating jobs by expanding markets for forest products. The FY 2014
President's Budget also proposes to allocate $10.5 million to Wood to
Energy Initiatives which support wood energy project design, pre-
construction activities and construction.
______
Response of Pamela K. Haze to Question From Senator Wyden
Question 1. What are the total collections (royalties, rentals,
bonus bids, fees, and other payments) made by the Department of the
Interior for each of the last 5 fiscal years? Please provide a chart
displaying the amount and type of each the collection. With respect to
payments relating to minerals, please specify the collection by type
(e.g., OCS oil and gas bonus bids; Federal onshore oil and gas
royalties, etc.).
Answer. A historical table showing Department of the Interior
receipt collections for 1982-2013 est. is provided which displays the
source of the receipt by type.
Question 2. What payments are made by the Department to the states?
To counties? Please specify the source of the payment (e.g. State share
of Federal coal receipts; PILT payment; County share of Federal
geothermal receipts). Please specify total payment by state and where
relevant, by county. Please provide this information for each of the
last five fiscal years.
Answer. State and county receipt information for mineral, grazing
and timber revenue payments is provided in the table State and County
Disbursements 1999-2012. More detailed information regarding State by
State disbursements from Federal on and offshore oil and gas production
are provided in the tables on Federal Onshore and Offshore Oil and Gas.
State information on PILT payments, which are derived from the
General Treasury rather than receipts, is provided on the PILT State
Reports 1978-2012. County specific information for BLM Secure Rural
School payments in years 2000-2011 are available on-line at http://
www.blm.gov/or/rac/ctypaypayments.php.
Responses of Pamela K. Haze to Questions From Senator Murkowski
Question 1. Alaska is the largest state in the United States. It
has approximately 229 million acres of land in federal ownership, more
than any other state in the country. As a result, PILT payments make up
the largest percent of federal land payments in Alaska. Yet Alaska has
the lowest average per acre payment in the country. What changes would
have to be made to the PILT formula to correct this inequity and ensure
that Alaska counties get compensated fairly for the impacts federal
lands have on the tax base and their local economies?
Answer. The Department of the Interior computes Payments in Lieu of
Taxes payment amounts using the formula that is dictated by statute.
Section 6902 of the Payments in Lieu of Taxes Act (P.L. 97-258) directs
the use of the greater of two alternatives that consider the number of
acres of qualified Federal land in the county (or local jurisdiction)
and considering a population ceiling limitation and prior year revenue
payments retained by the county. The population ceiling factor provides
a higher allowance for more highly populated counties. Alaska's
payments reflect this effect, whereby less populated counties receive a
lower allowance.
Modification of the formula would be necessary to change the
allocation to less populated jurisdictions. Congress would need to
enact legislation in order to modify the formula.
More information on the PILT program can be found at http://
www.doi.gov/pilt/faqs.cfm
Question 2. In your testimony you describe the calculation for PILT
payments and that certain federal land payments received by a county or
local jurisdiction in the preceding year are counted against future
PILT payments, thereby reducing the PILT payment. What federal land
payments count against future PILT payments and is this uniform for all
counties receiving PILT payments nationwide?
Answer. Certain Federal payments are considered in the calculation
of PILT entitlement amounts. The prior year payment amount made under
the authority of these programs is deducted in the derivation of the
PILT entitlement for the current year. Not all Federal payments are
considered, only those that are specifically named in the PILT Act,
including the Refuge Revenue Sharing Fund, the National Forest Fund,
the Taylor Grazing Act, the Mineral Leasing Act for acquired lands, the
Federal Power Act, and the Secure Rural Schools and Community Self-
Determination Act of 2000. All counties are treated equitably in the
application of this reduction. The PILT Act requires the governor of
each state to report the payments retained by counties or other local
jurisdictions in the state to DOI each year.
Responses of Pamela K. Haze to Questions From Senator Manchin
Question 1. My state of West Virginia is home to about 1 million
acres of SRS eligible land and 1.2 million acres of PILT eligible land.
In 2012 alone, West Virginia received nearly $3 million in PILT
payments and more than $1.7 million in SRS payments.
West Virginia is also a largely rural state and the expiration of
the SRS program will have a greater impact on us than it will more
populated states.
In the second panel today, we will hear from Mark Haggerty with
Headwaters Economics. Are you familiar with his proposals for a single
payment model and his proposal to increase the population limit for
rural counties? If so, what is your opinion on these proposals?
Answer. The Department and the Administration support
reauthorization of the Secure Rural Schools and the Payments in Lieu of
Taxes programs. Changes to the population ceiling used in the PILT Act
would modify the allocation of PILT funds, benefitting some
jurisdictions and disadvantaging others. As part of the reauthorization
process, the Department would be available to evaluate the impacts and
outcomes of specific legislative proposals. Speculation about the
impacts, the pros and cons, and the benefits of one proposal is
premature without a full understanding of the exact changes proposed
and how they would be implemented and funded.
Responses of Pamela K. Haze to Questions From Senator Landrieu
Question 1. Can you provide a breakdown, program by program, of all
money collected by the Department of the Interior over the course of
FY2012?
Answer. A breakout of the Department's FY 2012 receipts is provided
in the accompanying historical table of Department of the Interior
receipt collections.
Question 2. Can you provide a state-by-state breakdown of these
funds, i.e. Texas contributed X in onshore oil and gas revenues- again,
for every program from which the Department of the Interior collected
revenues, including offshore oil and gas development?
Answer. The information for FY 2012 is included on the following
historical tables provided: State and County Disbursements 1999-2012;
Federal Onshore Revenues by State 1999-2012; and Federal Offshore
Revenues by State 1982-2012. The Federal Onshore and Offshore tables
provide greater detail of the payments in the State and County
Disbursements table.
Question 3. Can you provide historic data, for each individual
program, beginning with the enactment date for each respective program,
of all funds collected by the Department of the Interior? i.e. - from
19XX, when revenue collection for onshore oil development began, the
Department of the Interior has collected the following amounts: $XXXX
in 1920, $YYYYY in 1921, etc.
Answer. Provided is a table showing the historical data for the
Department's receipts collections dating back to 1982. Data prior to
that point is not readily available.
Question 4. Can you provide this historic data on a state by state
basis?
Answer. The historical data on a state by state and county basis
for mineral, grazing and timber revenue payments is provided in the
table State and County Disbursements 1982-2012. More detailed
information regarding State by State disbursements from Federal on and
offshore oil and gas production are provided in the tables on Federal
Onshore and Offshore Oil and Gas.
Question 5. Can you provide a list of the legislation that created
or defined each revenue generating program?
Answer. A full list of the statutory authorities for the
Department's mineral revenue and disbursement accounts is provided.
With regard to BLM payments to Oregon and California grant lands
counties, under the Oregon and California Act of 1937, BLM paid 50
percent of receipts from Federal activities on O&C lands (mainly from
timber sales) to 18 counties in western Oregon. Over time, these
revenues decreased since due to changes in Federal timber policies.
The Secure Rural Schools and Community Self-Determination Act of
2000 (P.L. 106-393) was enacted on October 30, 2000, to provide a
predictable payment to States and counties, in lieu of funds derived
from federal timber harvests. Payments were based on historical
payments, adjusted for inflation. The Department of the Interior
administers payments for the O&C grant lands only and the majority of
the program is administered by the U.S. Forest Service.
Under P.L. 106-393, payments for a fiscal year were made in the
following fiscal year through 2007. The payments have been extended
three times. P.L. 110-28 extended payments for 2008. Section 601 of
Public Law 110-343, provided an extension of payments to the O&C Grant
Lands and the Coos Bay Wagon Road counties through fiscal year 2011
(with final payment to be made in 2012). Congress enacted Public Law
112-141, providing an extension of payments to the O&C Grant Lands and
the Coos Bay Wagon Road counties through fiscal year 2012 (with the
final payment to be made in 2013),
Question 6. Can you provide, for each of the following years, a
heatmap (assigning a color for each county on the basis of revenues
collected- i.e. white = $0, while purple= $maximum) of all revenues
collected by the Department of the Interior on per-county basis
(including OCS revenues, attributed to the respective coastal zone)-
2012, 2002, 1992?
Answer. Provided are heatmaps showing State revenue disbursements
for 2012 and 2002.
Question 7. Can you provide a breakdown, program by program, of all
payments from Department of the Interior to states, and an explanation
of what each program pays for?
Answer. Detailed information regarding the programs making payments
to states from Interior's revenue activities is provided. Historical
data on a state by state and county basis for mineral, grazing and
timber revenue payments is provided in the table State and County
Disbursements 1982-2013. More detailed information regarding State by
State disbursements from Federal on and offshore oil and gas production
are provided in the tables on Federal Onshore and Offshore Oil and Gas.
Question 8. Can you provide a breakdown, state by state, of all
payments from Department of the Interior to states? i.e.- Texas
received X amount under PILT, Y amount for onshore oil development
revenue sharing, etc.
Answer. The historical data on a state by state and county basis
for mineral, grazing and timber revenue payments is provided in the
table State and County Disbursements 1982-2013. More detailed
information regarding State by State disbursements from Federal on and
offshore oil and gas production are provided in the tables on Federal
Onshore and Offshore Oil and Gas.
PILT payments by State, which are derived from the General Treasury
rather than receipts, are provided on the PILT State Reports 1978-2012.
County specific information for BLM Secure Rural School payments in
years 2000-2011 are available on-line at http://www.blm.gov/or/rac/
ctypaypayments.php.
Question 9. Can you provide historic data of all payments to states
from the Department of the Interior, beginning with the date of
enactment for each respective payment program?
Answer. A breakout of the Department's receipts is provided in the
historical table of Department of the Interior receipt collections for
years 1982-2013.
Question 10. Can you provide a state by state breakdown of this
historic data?
Answer. The historical data on a state by state and county basis
for mineral, grazing and timber revenue payments is provided in the
table State and County Disbursements 1982-2012. More detailed
information regarding State by State disbursements from Federal on and
offshore oil and gas production are provided in the tables on Federal
Onshore and Offshore Oil and Gas.
Question 11. Can you provide a list of the legislation that created
or defined each revenue generating program?
Answer. A full list of the statutory authorities for the
Department's mineral revenue and disbursement accounts is provided.
Question 12. Can you provide, for each of the following years, a
heatmap of all payments made by the Department of the Interior on per-
county basis (including OCS revenues, attributed to the respective
coastal zone)- 2012, 2002, 1992?
Answer. Provided are heatmaps showing State revenue disbursements
for 2012 and 2002.